Zhejiang Yong Xin Digital Technology Co. Ltd., a subsidiary Chinese electronics retail distributor China 3C Group, has established an electronic retail franchise operation.

Hangzhou Letong Digital Technology Co. Ltd. is the name of the new operating entity that will help to establish electronic franchise stores in third tier and county-level cities in eastern China.

Letong has commenced operations with USD2.9 million in registered capital from China 3C Group to be utilized specifically for the marketing of the franchise plan and the build out of 15 direct stores, which will be owned and operated by the company and will serve as a model for franchisees. The company's goal is to open up 15 direct stores and 15 franchise stores in 2009 with 100 additional franchise stores in 2010.

All franchise store locations will be known as Yong Xin Digital Technology. They will utilize Yong Xin's logo and have similar store layouts and color patterns. Future franchise stores are expected to be converted from already existing retail store locations. In many smaller cities in China, consumer electronic products such as cell phones and computers are sold in single-product stores.

Upon signing a franchise agreement, Letong will convert selected single-product stores into comprehensive stores that carry a wide variety of branded consumer electronic products and product lines. A minimum of 75% of franchisee store products will be supplied by China 3C through the company's wholesale electronics operating division. Each franchise store will have access to essentially all of China 3C's roughly 3,000 consumer electronic products.

Letong will be run by Liu Zhenwei, who will become the CEO of the Letong operating entity. Liu has Chinese retail experience having spent the last eight years working at Beijing Zhenshanmei Co., a manufacturer and franchise store operator of health and cosmetic products.