Feb 10 2010
SOKO Fitness & Spa Group, Inc. (OTC Bulletin Board: SOKF) ("SOKO" or the "Company"), an operator of fitness centers, beauty salons and spas in Northeast China as well as suburban Beijing, today provided an update on its recently broadened geographic expansion strategy. In addition to its core strategy of targeting Tier-2 cities in China, SOKO has extended its geographic expansion strategy to include targeting facility openings in select under-penetrated, suburban areas of Tier-1 cities in China where it sees the potential to capture market share and achieve significant returns on investment.
SOKO defines a Tier-1 city in China as one of the major metropolitan areas in the country, with a population of a least 10 million. SOKO defines Tier-2 cities as cities with populations between 1 and 7 million.
During its 17 year history, SOKO has maintained operations in Tier-2 markets such has Harbin and Shenyang in Northeast China, where the SOKO has developed its brand and strategy to cross-sell its fitness center, beauty salon and spa services in these generally under-served and less competitive markets. According to its broadened geographic expansion strategy, SOKO will continue to seek selected Tier-1 center opening initiatives in under-served areas of these more competitive markets that will target spa and salon facilities, as well as additional fitness and yoga centers and new services such as medical beauty centers in order to cross-sell its services between business segments.
SOKO's broadened geographic expansion strategy was recently evidenced by its entry into the suburban Beijing market in December 2009 through the acquisition of a majority interest in two fitness centers. The acquisition of these centers is consistent with SOKO's growth strategy to pursue strategic geographic expansion through strategic acquisition. SOKO plans to pursue additional expansion opportunities in the Beijing, primarily targeting under- penetrated, suburban areas and sections of the city in which SOKO believes it has the potential to capture significant local market share.
"While we continue to target Tier-2 cities where we believe we have the most potential for return on investment, we believe a significant opportunity exists in and around larger markets as well," said Tong Liu, Chief Executive Officer of SOKO. "We believe that pursuing strategic growth opportunities in suburban areas of Tier-1 markets, such as Beijing, is consistent with our core strategy of opening facilities in areas that feature relatively low penetration from competitors, and where we believe SOKO can most effectively compete.
"As we move forward, we will look to broaden the range of services we offer to include beauty and aesthetics in addition to fitness centers. We believe this strategy will continue to enable us to cross-market and sell our full range of SOKO-branded services. We believe that we will be able to execute on this core strategy in these newer markets in a manner similar to what we have achieved in our historical markets of Harbin and Shenyang," Mr. Liu concluded.
SOKO's two currently owned Beijing fitness center facilities comprise a combined membership base of approximately 2,000 and are located in Beijing's Huilongguan district, a high-density commercial and middle class residential district with a population of approximately 300,000. Each club occupies over 3,000 square meters and features state-of-the-art exercise facilities, high- end equipment and other amenities consistent with SOKO's existing fitness center properties.
Source:
SOKO Fitness & Spa Group, Inc.