The Shanghai government yesterday officially merged four leading state-owned commercial groupssintosone retailing giant, with plans to develop an internationally renowned retailer within five years.

　　Analysts say the conglomerate was created to meet increasing competition from foreign retail giants and prevent local companies from competing with each other.

　　The new giant, called Shanghai Bailian (Group) Co Ltd, will combine Shanghai Yibai (Group) Co Ltd, Shanghai FriendshipsgroupsInc, Hualian (Group) Co Ltd, and Shanghai Materials (Group) Corp. The four companies currently run department stores, supermarkets, hypermarkets, convenience stores and specialty stores across the county.

　　Collectively they run 4,000 outlets in China, including Shanghai No 1 Department Store, as well as the Lianhua and Hualian supermarket chains.

　　"This is the city's first step to reconstruct state assets,," said Shanghai Vice Mayor Feng Guoqin. "The new company will focus on the chain store business and logistics services and operate completely according to market demand. We aim to build the companysintosa world-renowned competitive player in both domestic and global markets in three to five years."

　　With a registered capital of 1 billion yuan and total assets worth 28 billion yuan, the new company operates in more than 20 provinces and municipalities across China. Annual sales totaled 70 billion yuan last year.

　　"Instead of only expanding in the domestic market, the new company will attach more importance on international cooperation to sharpen its competitive edge," said Bailian Chairman Zhang Xinsheng, former chairman of Shanghai Yibai Group.

　　"Companies are encouraged to develop their own specialties to avoid internal competition," he said.

　　Wang Zongnan, chairman of Lianhua Supermarket Holdings Co Ltd, a subsidiary of Shanghai Friendship Group, was named president of the new group.

　　"The megamerger is apparently the city's move to meet mounting competition from foreign retailers that are expanding quickly in China," said Deng Yaping, an analyst with Industrial Securities Co. "It can also prevent malicious competition, such as price wars, among domestic players that are mostly state-owned companies."

　　Foreign retail giants such as Wal-Mart, Carrefour and 7-Eleven have announced plans to either enter or expand operations in Shanghai.

　　Wal-Mart's first local store is expected to open in two years, and it already has a procurement center in the city. Carrefour is planning to open supermarkets and discount stores in Shanghai in addition to more hypermarkets. Convenience store chain, 7-Eleven, plans to open its first Shanghai outlet in 2005.

　　The new company can help lower costs and best deploy existing resources, said Chen Xinkang, vice chairman of the Inter-national Business School of Shanghai University of Finance and Economics.

　　It could also lead to slashing jobs, particularly among management, said Chen.