Beijing supermarkets' H1 profits decrease greatly

Beijing supermarkets saw their profits slide in the first half of the year, marking the first such decrease in nearly three years.

For the first half of 2012, Jingkelong reported 4.5 billion yuan ($0.71 billion) in revenue, an increase of about 9.6 percent year-on-year. Even so, it had about 780 million yuan in profit, a year-on-year decrease of 24.6 percent. Wu-mart, a competitor of Jinkelong, reported having 338 million yuan in net profit in the first half, a slight year-on-year increase of 0.5 percent.

Meanwhile, China Resources Enterprise had 1.44 billion yuan in net profit in the first half, down 3.6 percent year-on-year. And the net profit of the Fujian-based Yonghui Supermarket was 193 million yuan in the first half, down 28.57 percent. Meanwhile, CP Lotus reported a loss of 790 million yuan for the period.

"A lot of supermarkets are in Beijing's central business district, where the cost of rent has been increasing quickly," said Li Sheng, deputy director of the China Chamber of Commerce Expert Working Committee. " Besides property, other costs are increasing, such as labor costs, which explains why these companies' gross profits have declined."

The industry counselor Liu Hui said more and more customers, after considering time, traffic cost and other condition, have become inclined to go to supermarkets near where they live to shop.