China is now the world’s largest market for electronics with 1.29 billion phone users and 200 million computer users in 2016. As a consequence, domestic and foreign electronics retailers such as Suning and Best buy are focusing their effort in expanding their network in key locations to gain market shares.
Suning Appliance Co, the Nanjing-based retailer, said in a statement that it had raised CNY2.43 billion (US$350 million) by issuing 54 million shares to six institutions for outlet expansion. With this money, Suning will open 250 outlets nationwide in China, set up a logistics center in Shenyang of Liaoning Province and buy facilities for two flagship stores in Shanghai and Wuhan.
According to Suning, new outlets are expected to generate CNY18.63 billion in revenue annually. It has started construction work of five logistics centers and is choosing locations for the other four more. Currently, the company runs large logistics hubs in Beijing, Hangzhou and Nanjing.
American consumer electronics retailer Best Buy released a statement recently announcing that it would cut back spending by about 50 percent in 2015, including a “substantial reduction in new store openings in China, the United States and Canada.” Thus it is expected that Best Buy’s expansion plan in China would be slowed down.
On the other hand, according to the president of Best Buy Asia, the company is not gearing down its expansion but rather planning to increase its store number in the next six year.
Best Buy entered Chinese market by opening its first store in China in 2006 and started to expand in this October. Four stores and one store have been opened in Shanghai and Beijing, respectively.
Gome Electrical Appliance Holdings Ltd, China’s biggest electrical retailer, has spent CNY541 million (USD75 million) for a 10.7% stake in Sanlian Commerce Co Ltd, a major appliance retailer in the province, becoming new owner of Sanlian.
After Sanlian Commerce originally sold the stake to Shandong Longjidao Construction Co at an auction on February 2016, Gome then acquired all of Longjidao several days later to become the real owner of the Sanlian stake.
With the acquisition, Gome could enhance its sales in Shandong while Sanlian could share Gome’s market resources with independent operation. According to a statement, Gome won’t open franchise stores in the province to avoid competition with Sanlian.