Sources inform "Globes" that fashion chain Fox-Wizel (TASE: FOX) controlling shareholder Harel Wiezel has decided to enter the Chinese market before moving into Russia. Only after establishing a presence in China will Fox-Wizel prepare infrastructure for entering Russia.
Entering the Chinese market will be one of Fox-Wizel’s largest projects. In the initial stage, the Fox chain plans to open fifteen stores simultaneously, with financing from the holder of the Chinese franchise for Nike, who has a franchise agreement with Fox-Wizel.
Fox-Wizel believes that it will have trouble allocating management resources and attention for simultaneous complex projects in China and Russia.
Fox-Wizel and Africa-Israel Investments (TASE: AFIL) controlling shareholder Lev Leviev founded a joint company, which they own in equal shares, for purposes of doing business in Russia. Entry into Russia will be later than planned, and will be based on a chain owned by Fox-Wizel, not a franchise model. The chain used a franchise model in its penetration of Singapore, Australia, Hungary, the Czech Republic, and now China. Negotiations are also underway to establish a chain in London.
Israeli fashion chain Castro (TASE: CAST) has also signed a franchise agreement to establish a chain of shops in Russia. The franchise holder will buy merchandise from Castro for five years. This model differs radically from the model used in Germany, in which Castro operates the entire operation as a full partner of a local party.
Joining forces with Leviev is designed to smooth Fox-Wizel’s entry into Russia, through his network of connections and shopping malls. Entering Russia is strategically important for Fox-Wizel’s future development in Europe.
Published by Globes [online] - www.globes.co.il - on March 3, 2005