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Entry Fee, Profit-Sharing and Payment Settlement Methods

Department Store

1. Major fees include sale guarantee and profit-sharing. Sale guarantee fee is generally required by stores with better conditions. About half of all department stores require a sale guarantee, with the highest amount going up to Rmb1.8 million a year and the average is Rmb30,000-80,000 a year.

2. Profit-sharing: Department stores use varying profit-sharing ratios for different products. For clothes, shoes and leather goods, the ratio is generally 30:70; for jewellery, 15:85 (the ratio is higher for domestic products and lower for well-known brands); for gold, 8:92. In the case of cosmetics, the ratio for domestic products is 25:75, while the ratio for imported products varies, with the highest being not more than 25%. Apart from the type of products, the profit-sharing ratio also varies depending on the floor, area and location of the counter.

3. Other miscellaneous fees include entry fee, advertising fee, promotion fee and management fee. Some department stores do not charge entry fee while others charge a few thousand to ten thousand yuan, depending on the type of products. Some department stores charge advertising fee or anniversary celebration sponsorship fee, and certain department stores charge promotion fee which is about 1% of sales.

4. The salary of special counter sales attendants is paid by the supplier generally in the form of "basic salary + commission".

5. Payment settlement: the settlement period of most department stores is 45-60 days, while the settlement period of a few department stores may be as long as 90 days.

Hypermarkets and Supermarkets

1. Consignment

  • Trial sale (the trial period is usually three months and the trial sales amount is agreed upon by both parties). Both parties will enter into a trial sales agreement, and the fees to be charged mainly include: entry fee (the fee level will depend on the product type and the requirements of the store), new product barcode fee (the fee level is proportionate to the entry fee), distribution fee (usually 1-3% to be paid by the supplier to the store after the supplier delivers the products to the store's logistics centre and the logistics centre distributes the products to various shops).
  • Sale on an annual basis. Both parties will enter into an annual sales agreement, and the fees to be charged mainly include: entry fee, new product barcode fee, distribution fee, discounts on goods, discounts on sales, year-end sales incentive, network information fee, festival fee and new store opening sponsorship fee.

2. Leasing

The main fees to be charged every month include management fee and a percentage of the sales revenue (the ratio varies with different products and is generally 20:80).

3. Payment Settlement Methods

The payment settlement methods include: cash on delivery, periodic payment (for a period of seven, 15, 30 or 45 days), payment in advance, and payment on actual amount of goods sold. Payment is usually made in cash or by cheque.

Content provided by Hong Kong Trade Development Council
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