South Beauty boss, Zhang Lan. (Photo/CNS)
Recent controversy over celebrated restaurant entrepreneur Zhang Lan relinquishing her Chinese citizenship in favor of an unnamed country has brought attention to the South Beauty Group, the upscale restaurant chain she founded.
The case casts light on an emerging phenomenon of Chinese nationals seeking security in a foreign passport as growing legions of the country's rich take up residency and citizenship abroad.
Rumor suggests Zhang's move was made to avoid heavy income taxes in China and to circumvent restrictions imposed by the government on restaurant businesses as well as a legal dispute with her South Beauty co-founder.
A recent commentary published in Guangzhou's Southern Metropolis Daily said the prominent businesswoman's controversial decision only exposed the recent difficulties facing China's restaurant industry.
Recently released figures show the country's restaurant trade is not performing as well as in previous years. The latest numbers show restaurant revenues in the country have fallen for the past 10 months, and 2012 growth stands at around 13%, lower than last year's nearly 17%.
Compounding lower revenues is that many chain restaurants face new government-imposed hurdles just as they are attempting to raise funds overseas or gain approval for public offerings. Zhang's South Beauty is among them.
The group applied for listing on mainland stock exchanges in March 2011, though the regulator rejected the application this February.
A Chinese academic quoted in the commentary said that the China Securities Regulatory Commission has always been reluctant to approve restaurant groups' IPOs.
The company was thus forced to change strategy; Hong Kong media recently reported South Beauty expects to launch its IPO on the local bourse soon.
An Yong, South Beauty president, told media that there are no obstacles in approval for their public offering in Hong Kong and that the company is waiting for the best time to list.
In a defense of Zhang's nationality switch, An noted that the decision was made for the future of the group.
Since the Chinese government appears unlikely to change its attitude toward the restaurant business, an industry veteran who requested anonymity told the newspaper that restaurant owners in China must adapt their business strategies to the changing environment and meet the different needs of customers if they wish to survive.
China does not allow dual citizenship; people who gain citizenship elsewhere must relinquish their Chinese nationality.
Source: http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20121212000088&cid=1102&MainCatID=11
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