Warner Plans China Rollout

Warner Bros. plans to open about 200 stores in China over the coming years as demand for branded merchandise increases in China, the Chinese partner of the company’s consumer products unit said Sunday.

The unit of Time Warner Inc. opened its first China store in Shanghai on Sunday. It is operated by Hutchison Harbor Ring, a subsidiary of conglomerate Hutchison Whampoa Ltd.

“In the long run, we would like to open no less than 200 stores. During the next few years, we would like to make 200 as a target,” Michelle Chan, Hutchison Harbor Ring’s managing director, told reporters.

The companies plan to open the stores in mainland China, Hong Kong and Macao, starting off in Shanghai’s commercial centers and moving on to other cities including Beijing and southern China’s Guangzhou and Shenzhen, Chan said.

China’s growing population of consumers has attracted the likes of Warner Bros. and Walt Disney Co. to China, as they seek to cash in on the growing popularity of trademark characters including Mickey Mouse and Bugs Bunny.

Disney sells its merchandise in China through 2,600 retail spaces in larger stores such as Carrefour, and it aims to increase the number of such shops to about 6,000 by 2009.

Warner, Disney and their competitors are chasing a market where consumers are expected to spend about 100 billion yuan ($12.5 billion) on toys by 2010, driven by the country’s 300 million children below the age of 14, according to official forecasts.

But the big mark-ups for the famous-character products, along with the widespread availability of fakes, mean the sellers could face an uphill battle in China, analysts say.

Warner Bros., however, hopes that consumer demand for its authentic merchandise will increase as more licensed products become available in the Chinese market, and it says knock-off products have helped consumers to get familiar with its characters.

“The best testimony we can have to the popularity of our characters is that manufacturers desire to put those characters onto merchandise,” said Jeffrey Whalen, senior vice president with Warner Bros.’ consumer products unit.