Chinese Retail Giant Finds Best Fit with SAP

Wumart Sets New Standards for Chinese Retail Industry, Selects mySAP™ ERP and SAP for Retail to Replace Legacy Information Systems and Support Further Growth

BeijingAs continuing evidence of its global leadership in providing business software to retailers, SAP AG (NYSE: SAP) today announced that Wumart Group, one of the largest and fastest-growing private supermarket chains in China (listed at Hong Kong Stock Exchange, Stock Code 8277), has selected mySAP™ ERP and SAP® for Retail to upgrade the company’s information systems to drive profits. With the selection of SAP, Wumart becomes the first Chinese supermarket chain to implement an international enterprise resource planning (ERP) and retail package from a top global enterprise software provider.

The agreement marks another major success for SAP in the highly competitive retail market in China. As a retail giant, Wumart extends SAP’s portfolio of Chinese customers, which already includes leading manufacturers and financial services and petrochemical companies.

SAP will enable Wumart to roll out an ERP and retail system that connects its headquarters with more than 500 outlets to enhance management control, optimize business operations and support corporate core business processes, including category management, internal supply chain management, commodity planning and chain store management. With the SAP implementation, Wumart will be fully equipped to improve the company’s sensitivity and response time in a market where competition is becoming increasingly fierce. In addition, the SAP system will accommodate the integration of existing and future acquisitions.

The first phase of the project includes SAP for Retail at the Wumart headquarters and Tianjin branch; a logistics system for the distribution centers in Beijing; plus an interface to Wumart’s point-of-sale (POS) system and the SAP retail outlet system. The overall implementation will take approximately one year.

Started 12 years ago as one of the first supermarket chains in China, Wumart has emerged as one of the dominant retailers in the country with more than 700 stores, including hypermarkets, supermarkets and convenience stores in northern, eastern and northwestern China and $2.52 billion (RMB 20 billion yuan) in annual sales. In the past year, Wumart acquired several domestic chains, including Chaoshifa and MerryMart, the fourth- and fifth-largest supermarket chains in Beijing; Xinhua Stores, one of the largest and fastest growing retailers in northwest China; and Times Supermarkets, one of the leading retailers in eastern China.

Wumart’s selection of SAP shows that China’s retail industry is entering a new stage in the development of its IT infrastructure. To better serve their growing customer bases, Chinese retailers recognize the need to replace their homegrown and domestic retail software with standardized ERP and retail applications from world-class vendors. With SAP, Wumart will have the ability to adopt global best business practices for management and software solutions to improve scalability and reduce the complexity of its overall IT environment.

Wumart’s rapid geographic growth created the need to upgrade the company’s information systems. Its legacy IT system was insufficient to support data analysis, forecasting and automation, hindering the company’s overall development. To ensure a continued smooth growth path, Wumart’s management formed an ERP task force to evaluate international software solutions that can provide integrated management and business process optimization as well as global best practices of retail business.

The extensive selection process began in November 2005. Led by Dr. Zhang Wenzhong, chairman of the board of Wumart, the ERP project team visited all major software vendors, including SAP, and more than 20 international companies that had successfully implemented ERP systems in China, France, Switzerland, Canada, the United Kingdom and the United States. After a 10-month evaluation process, Wumart selected SAP for its broad experience, strong customer base and proven product integration across retail, financial and logistical operations. Other deciding factors included SAP’s solid R&D investments and groups in China, as well as SAP’s best practices and the scale of SAP service offerings for retail.

“Wumart has always played the leading role in applying advanced information technology for the retail industry in China,” said Dr. Zhang Wenzhong. “Wumart was the first retail group in China to adopt commercial point-of-sale and management information systems and utilize the Internet to connect the headquarters with the chain stores. By implementing SAP for Retail, we can establish an integrated management and information system for retail, finance and logistics. We will also draw on SAP’s best practices for the global retail business to improve our management processes and operational efficiency and to integrate our acquisitions so that we can make the most of the synergies they bring.”

“We are thrilled that the Wumart Group, China’s fastest growing retail giant, has selected SAP,” said Klaus Zimmer, president and CEO, SAP North Asia. “We look forward to providing Wumart with our experience in the global retail industry to help the company build a truly advanced management platform, fostering further business growth and setting international standards for the retail industry in China.”

SAP China Consulting will provide the implementation on this project.

About Wumart Group

Started in 1994, Wumart was one of the earliest supermarket chains in China. Today it is also one of the largest, with over 700 large hypermarkets, supermarkets and convenience stores in northern, eastern and northwestern China. It is also the fastest growing Chinese retailer, maintaining steady growth of both sales and profit. In the past year, Wumart has acquired the Chaoshifa and MerryMart supermarket chains, the fourth and fifth largest among Beijing retail chains. It has also acquired Xinhua Department Stores, northwest China’s largest retail chain and an A-share listed company, as well as China’s 28th largest retail chain, Times Supermarkets of Jiangsu province.
In November, 2003, Wumart Stores, Inc, a subsidiary of the Wumart Group, was listed in Hong Kong. It was the first Chinese private commercial enterprise to be listed overseas, and set records for over-subscription ratio, highest P/E ratio and the biggest sum of funds raised in Hong Kong’s Gem Board stock market.