This article first appeared in The Edge Financial Daily on December 10, 2018

KUALA LUMPUR: China was referred to as the “premier league” of Parkson Holdings Bhd in 2009 by then chief executive officer (CEO) of Parkson Retail Group Ltd (PRG), Datuk Alfred Cheng Yoong Choong.

Fast forward nine years and Yoong Choong no longer works for the group in which his uncle Tan Sri William Cheng Heng Jem chairs today. But his words still ring true — China is Parkson Holdings’ premier league, with the group having grown its operations since its first flagship store opened in Beijing in 1994 to 47 stores now.

In fact, the number of Parkson stores in China is higher than in Malaysia, which stood at 44 as of June 30, 2018.

Parkson Holdings has a 54.59% stake in Hong Kong-listed PRG and a 67.96% stake in Singapore-listed Parkson Retail Asia Ltd (PRA).

Parkson Holdings manages a total of 113 department stores — PRG manages the group’s stores in China, while its stores in Malaysia, Vietnam, Indonesia and Myanmar are managed by PRA.

Yoong Choong, who was part of the pioneer team that set up the Parkson stores in the early 1990s, resigned in 2013 due to family commitments. At present, PRG is led by Shaun Chong, who took on the role of CEO in 2014. He has 20 years of experience in China’s retail industry and has been with the group since 1994.

Parkson Holdings reported a net loss of RM99.44 million for its financial year ended June 30, 2018 (FY18). Its China operations were the only profitable segment in FY18, with a profit of RM111 million compared to a loss of RM42 million in FY7.

Parkson attributed this to the recovery in the retail market in China, evidenced by its gross domestic product growth rate of 6.8% for the first half of 2018, which exceeded the national target.

With its wide presence in China, PRG has been cognisant of China’s romance with online shopping, and the group has been capitalising on its online channels to drive visitor traffic to the stores. The group has also entered into a strategic collaboration with Secoo, one of the top online luxury retailers in China.

However, PRG’s positive earnings in China have not helped its share price. On Oct 25, its shares closed at a record low of HK$0.528 (28 sen). Year to date (YTD), PRG shares had declined by 38% to HK$0.56 last Friday.

Golden Eagle International Retail Group Ltd has a 14.01% stake in PRG. Golden Eagle’s chairman Roger Wang and his daughter, Chinese-American reality television star Dorothy Wang, are listed as substantial shareholders of PRG via their interest in Golden Eagle.

Parkson Holdings’ share price also hit a record low last Friday, closing at 28 sen. YTD, it has slumped by 46%. Heng Jem is the largest shareholder of Parkson Holdings, with a 32.6% stake.