This article first appeared in The Edge Financial Daily on February 9, 2018

KUALA LUMPUR: HRC World plc, spearheaded by a Malaysian management, yesterday signed an agreement to open an average of one Hard Rock Cafe per month in China for the next three years, given the strong consumer culture for fine dining and lifestyle there.

Incorporated in the UK and listed on Nasdaq First North in Denmark, HRC World is the holding company for the Hard Rock Cafe franchise in China and has its headquarters in Malaysia.

It was founded by Malaysian Datuk Noorusa’adah Othman who, prior to her venture into the Chinese market in 2013, brought Hard Rock Cafe to Penang and Melaka.

HRC World yesterday signed an agreement with China Construction Eighth Engineering Division Corp Ltd (CCEED), a subsidiary of state-owned enterprise, China State Construction Engineering Corp Ltd, to open 36 Hard Rock Cafes in the country.

Under terms of the agreement, CCEED will be the turnkey designer and builder of the cafes, and also responsible for the units’ total outfit, site and architectural selections, and for securing local approvals and permits of these sites.

There are currently two Hard Rock Cafes in China, located in Shanghai and Hangzhou, which commenced operations in the last quarter of 2016. A third outlet in Chengdu is expected to open this year.

Each new unit will require an investment cost of about 30 million yuan (RM18.65 million), which brings the total investment cost of the 36 units to some 1.1 billion yuan, funded through capital funding.

“Like other traditional food and beverage business, we expect each of these investments to break even in one year,” HRC World chairman B T Thong (pic) told reporters after the signing ceremony. Present were Noorusa’adah and group chief executive officer Alex George.

“The central government is pushing consumption as an avenue to drive [the economy] further, and the authorities note that there is a need for more international brands to enter the market there. With that, this is an opportune time that we are capturing,” Thong added.

He said the group has identified the target market for the new Hard Rock Cafes to be mostly the locals, and especially the domestic tourists, given the large population and growing middle class in China.

“About 30% should be expatriates and tourists who visit to purchase memorabilia at different Chinese cities, but our main guests are basically the Chinese themselves,” added Noorusa’adah.

Currently, the group has received a pre-approved list of locations by Hard Rock International, and its next step is now to zero in to the specific locations in partnership with CCEED, focusing on the first-tier cities, including one in Shanghai Disneyland.

In the bigger picture, the full-serviced food and beverages industry in China registered an annualised revenue growth rate of 9.8% in the five years through to 2016.

“We are at the infection point of joining the Chinese consumption culture and their rapid embracing of quality lifestyle,” said Thong. “With the advent of the One Belt One Road initiative, we believe the confluence of the ‘Silk Route’ of East meets West could not be more apt than with the opening of Hard Rock Cafes across China.”