Shanghai Nextage and the 1,060-store plan — holding to China while the cash ran out (1995)

A bet made too early, or supported the wrong way

The opening of Shanghai Nextage and the 1,060-store plan held two things together: the foresight to plant a large store in Shanghai before GDP per capita there had reached $1,000, and the attachment that would not release a sanctuary even as the company was being forced to repair its finances. The judgement about the Chinese market itself ran ahead of the Japanese retailers who followed years later. But refusing to scale back the expansion while no source of funds for bond redemption was in place can be seen as throwing into relief precisely the overseas risk the banks most feared, and hastening the withdrawal of their support.

Did an overseas strategy on the verge of working get dragged down by the collapse at home, or did an overseas investment carried at the expense of the core business cause the collapse itself? That Shanghai Nextage survived in Chinese hands and remains one of China’s leading department stores suggests Wada’s reading of China was not wide of the mark. Even so, the questions — whether the bet was too early, whether it was supported in the wrong way, and where the expansion should have been halted — still follow any company that tries to get out ahead into a growth market.