• 　Location background

Luoyang, located in the west of Henan province, is the political, economical, cultural, technical and education center of western Henan province. It is a city of landscape style, an excellent tourism city and a clean city confirmed by the state. And it is one of the most vigorous cities in central China.
Luoyang situated in western Henan province was the place where merchants gathered through the ages. Luoyang has the superiority of convenient traffic facilities, rich natural resources, numerous cultural relics, nice environment and favorable potential for development. Luoyang becomes a new business center for its big stream of people, material transportation capacity and the particularly favorable natural conditions of location, traffic and communication.
In the recent years, Luoyang comes out in front in Henan province for national economic indexes, gross domestic product per capita, total value of retail sales of consumer goods, employee average wages and residents savings deposit. There is a great potential in Luoyang for the development of retail sales of articles of daily use.
Luoyang National New & High Tech Industry Development Zone occupies a total area of 47 Km2 with perfect public facilities, dense population in surrounding areas and favorable conditions for the construction of a big emporium.

• 　Superiority and conditions for the development of retail sales

1．There has been a fast development of economy in Henan province and Luoyang city since the reform and opening up to the outside world.
The gross domestic product in Luoyang in 2002 was 53.5 billion yuan, about 11% increase than that of last year, and that's 1.5% higher than the average of the Province. The total value of retail sales of consumer goods was 19.46 billion Yuan, 10.8% more than last year. Luoyang comes out in front in Henan province for national economic indexes, gross domestic product per capita, total value of retail sales of consumer goods, employee average wages and residents' savings deposit. By the end of 2002, the population in Luoyang was 6.15 million, among them 1.4 million are living in the city proper. The actual average income of resident families in Luoyang was 7161.36 yuan and the average consumption expenditure 5386,56 Yuan, of which 3737 Yuan were for the foods, clothing, household equipments, service, cultural entertainment and education, occupying 70% of the total. So there is a potential market in Luoyang for retail sales.
2. There exists a fine environment for retail sales run by foreign businessmen.
First of all, the wholesale, retail sales and material transport of general commodities are clearly listed as encouraged items in the Guide Directories of Industries Invested by Foreign Businessmen published by the Chinese government in June, 2002, while the trade of wholesale and retail sales are limited.
Secondly, it is written in the CEPA agreement signed by the Chinese government and Hong Kong in June, 2003 that Hong Kong commodities covered by the tax items of 273 commodities of China can enjoy zero percent duties starting from Jan. 1, 2004 in case they are in conformity with the rules of the country of origin, and 17 service items are approved for entry.
What is more, all the domestic commercial retail sales will be opened to the world in 2005 according to the promises when China entered the WTO. A new high tide for the development of commercial retail sales will come in China at that time

• 　Backings for the development of retail sales in the Development Zone

Geographic location, traffic facilities and the environment
Luoyang National New & High Tech Industry Development Zone is located in the southwest of Luoyang, 8 Km to the city proper. It is close to Zhoushan Forest Park of 10,000 mu in the north and Luopu Riverside Park of 10 Km long in the south. It has a nice environment by a steam in front and a hill at the back.
convenient traffic facilities
Heluo Avenue, the main artery in the Development Zone, is the southwest exit of Luoyang. The southwest ring expressway and the overpass are under construction. It is convenient for the flow of people and material.
Population
The population within 3 km2 of the Development Zone is about 150,000 - 200,000. The age of the people is rather young, 77% of them are 15 - 64. Most of them have a higher education, 54% of them are above high school. The employment percentage is 76% against the total resident population.
There are the following areas with dense population in the Development Zone and nearby areas: the area of commercial and food and beverage mainly alongside Nanchang Road in the north, Furong (lotus)villas, Xinglong Garden and Shihua (petrochemical) residential quarters in the middle, and an area in the new site of Luobo (Luoyang Glass) and Luoyigao (No. 1 High Scholl of Luoyang) in the west. The total population is 120,000.
Market analysis
There is only one large comprehensive supermarket, that's Denis, within 3 Km2 in the area from Lichun Road in the north, Nanchang Road in the east, Luopu Park in the south and Jiede control area of Yiyang county in the west. The business area of Denis is 16,000 Km2, but according to actual observation and related statistical data it falls far behind for demand.
The following is the information in reference of Denis's data:

Notes: The business operation of Denis supermarket is aiming at proving Luoyang people with goods of high and mid grades. The consumption level of the people in and nearby the Development Zone is higher than other counties and districts due to the fact that there exists here many new and high tech enterprises and luxurious villas, the residents here are younger and they have a higher education.
Besides there is no mature commercial zone within the Development Zone, no supermarket which has a business area exceeding 1000 m2, and so there is fewer competition in the same trade. There is a great potential for commerce in the Development Zone due to the ever-growing population in this area following the city's extension to the south and the construction of the 4th phase industry park of the Development Zone.

• 　Estimated scale of the project

Business scale
A large-size comprehensive supermarket of general merchandise is to be built with a construction area of 40,000 M2 and business area of 30,000 M2. The building has 3 floors, each has a construction area of 13,000 M2 and business area of 11,000 M.2
Estimated investment and funds collection
Investment estimate
The total investment of the project is 120 million Yuan including 50 million Yuan for factory house (parking area) and supplementary facilities, 14 million Yuan for other expenditure, accrued expenses and reserve funds and 56 million Yuan for current fund.
The financial estimates of the total investment are as follows:

the collection of funds
The project will be of the type of joint venture. Both parties of the joint venture will determine the percentage of investment.

• 　Financial evaluation

The financial analysis is made based on "Methods and Parameters for Economic Evaluation on Construction Projects" (Second Edition) issued by the State Planning Commission and the Research Institute of Standard Quota under the Ministry of Construction, "The Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment", "Accounting System of the People's Republic of China for Foreign-funded Enterprises" and actual data of some commercial service enterprises.
The business income of 213.83 million Yuan can be obtained with the profit before tax of 25 million Yuan after the project is completed and business operation started.