Activity in Gyudon (Beef Bowl) Business in China

July 22, 2009

Ting Qiao (Cayman Islands) Holding Corp., a restaurant operating subsidiary of Ting Hsin Holding Group, in which ITOCHU Corporation holds a 20% stake, and Yoshinoya International Co., Ltd. have agreed on establishing a joint venture to jointly develop a restaurant business in China. Going forward, the three companies will begin market research and flesh out details such as areas for entry.

The restaurant industry in China is growing at an astonishingly fast 18% annual average, with the market size said to amount to around 20 trillion yen. In particular, fast food is experiencing even faster growth within this rapidly growing industry, with sales of about 3.8 trillion yen in 2005 growing to about 6.2 trillion yen in 2008, accompanying the changes in lifestyle with China's economic growth.

Yoshinoya currently operates stores mainly along coastal regions in China. Going forward, Yoshinoya would like to take advantage of the Ting Hsin group's organizational infrastructure, logistics network, food procurement capabilities, store development capabilities, human resources training center, and other resources to accelerate the pace of expansion in urban areas of inland China. Initially, it aims for opening stores in the Sichuan area by the end of the current fiscal year. Together with those in areas where it already has a presence, Yoshinoya is aiming to open 1,000 stores across China by the mid-2010s.

Ting Qiao operates a restaurant chain in the fast food category centered on Dicos, which focuses on fried chicken and has achieved rapid growth since its establishment in 1996. The current number of stores reaches about 1,000, making it the third-largest fast food chain in China after KFC and McDonald's. In addition, Ting Qiao operates 38 stores in the Master Kong Chef's Table beef noodle chain. Ting Qiao can now absorb the Japanese-style restaurant chain operation and management methods through the operation of Yoshinoya stores and aims to in 2020 become the largest restaurant chain in China, with an expected total of 6,000 stores: 3,000 Dicos, 2,000 beef noodle outlets, and 1,000 stores under the new business category containing Yoshinoya.

ITOCHU is accelerating its expansion into the food and retail market in China, going forward through investment made this year in the Ting Hsin Holding Group. This project is the first since becoming a shareholder of the Ting Hsin Holding Group and ITOCHU plans to continue to enact a global SIS strategy in China.

New Company Profile (expected)

Company nameTo be decided
Main business descriptionOpening and operating Yoshinoya stores in China
EstablishmentBy the end of 2009
CapitalApproximately 1 billion yen
ShareholdersYoshinoya International Co., Ltd. (XX%),
Ting Qiao (Cayman Islands) Holding Corporation (XX%)

Investing Company Profile

Company nameYoshinoya International Co., Ltd.
RepresentativeRyusuke Tanaka (President)
Headquarters location4-3-17 Shinjuku, Shinjuku-ku, Tokyo
EstablishedFebruary 5, 2009
Capital150 million yen
ShareholdersYoshinoya Holdings Co., Ltd. (100% owned)
Company nameTing Qiao (Cayman Islands) Holding Corp.
RepresentativeYin-Heng Wei
Headquarters locationCayman Islands
EstablishedApril 10, 1996
CapitalUS$20 million (approximately 2 billion yen)
ShareholdersTing Hsin (Cayman Islands) Holding Group (88%), Richoux Ltd. (12%)