TYCOON BETS ON TIMING OF CHINA STORE.

Byline: Edward A. Gargan The New York Times

The Japanese retailing tycoon Kazuo Wada's latest gamble might seem like a long shot: He has built the world's second-biggest department store after Macy's in New York and stocked it with everything from a fire-engine red Ferrari to imported cosmetics in this city whose population can mostly just gawk at such luxuries.

But Wada has always liked to take risks. Inspired by his first encounter with a modern supermarket in America in the 1960s, he returned home and transformed his family's vegetable business into a chain of general stores that competed with Japanese retailing giants. A decade later, he opened a couple of stores in Sao Paulo, Brazil, largely because he had heard that city had a big ethnic-Japanese population.

Later, he tried his luck in Singapore, even though it was still a mostly poor city-state struggling to industrialize. And in 1984, defying the advice of bankers and industrialists, he chose a fishing village rather than a downtown location as the site for his first store in Hong Kong.

Not all the ventures succeeded. But enough did to enable Wada to build his Yaohan International Holdings into a retailing, restaurant and property conglomerate with annual revenue approaching $3 billion and interests on four continents, including supermarkets and department stores in the United States and a restaurant in New York City.

Today, he is pursuing his most ambitious project to date, the Nextage department store across the mud-brown Huangpu River from downtown Shanghai. Built on land where water buffalo worked rice fields a decade ago, Nextage opened in December to a million people.

All day, the crowds surged across a marbled esplanade, pushing past bowing women in red berets under soaring arches before pouring into the 10-floor emporium. But while Shanghai is a prosperous city by Chinese standards, with a per capita annual income of nearly $2,000, the store's wares were out of the reach of most shoppers.

The Ferrari was priced at $350,000, or 636 years worth of wages for the average Chinese. A black Cadillac Fleetwood could be had for $95,000. Also on prominent display were designer suits, wide-screen Toshiba televisions, Hallmark cards and pricey firming makeup made by Princess Marcella Borghese.

After the curiosity seekers got their fill, traffic plummeted and revenue thinned. But Wada remains unperturbed. He has always specialized in moving into promising areas just a little too soon - and then reaping the rewards when his market catches up with his ambition.

``I see China's era as the 21st century,'' Wada said in an interview in his opulent Hong Kong home, Sky High, the 42,000-square-foot former residence of the taipan - or ``big boss'' - of the Hong Kong and Shanghai Bank, a building perched on the summit of Victoria Peak. ``My philosophy is doing things at the best time. Everyone is pessimistic now, so things are right now.''

Wada's supporters say China's favorable economic outlook supports his investment theory. ``Wada-san is looking 10 years into the future,'' said a Japanese economist who requested anonymity. ``They don't have to make a profit for five years. The rich Shanghaiese are increasing every year. In Shanghai, Yaohan only needs 3 percent of the population.''

The 68-year-old Wada cuts a gnomish figure as he pads into his cavernous living room, a gaggle of aides fluttering in his wake. He favors blue suits and dark ties, but his conservative demeanor masks a flamboyant business style.

In 1990, in a move without parallel in Japanese corporate history, he shifted Yaohan's headquarters to Hong Kong to escape what he calls his homeland's suffocating business climate.

``I thought that if I stayed in Japan, I would not be able to create an international conglomerate,'' explained Wada. ``In Japan, the top leader can't make a decision; everything has to come from the bottom.'' Unless it changes its ways, he adds, ``Japan will miss the train.''

Enthralled by China's economic boom, Wada announced plans to move his headquarters to Shanghai this month and become the first big Asian corporation to base itself inside China. He has already opened 23 supermarkets around the country and hopes to create a China-wide empire of department stores, warehouses, supermarkets, restaurants and fast-food outlets.

That is quite a vision for a company that traces its roots to a vegetable shop opened by Wada's father and mother in 1910 in Atami, a coastal town south of Tokyo.

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Photo

Photo: Entrepreneur Kazuo Wada has built the world's second -biggest department store in Shanghai, China.

The New York Times