#1: [转帖]华尔街日报： Best Buy to Enter A Crowded Field With China Store (1556 reads) 作者: valley, 时间: 2006-12-09 周六, 14:12 — 作者：valley 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Best Buy to Enter A Crowded Field With China Store
December 9, 2006
BEIJING -- Best Buy Co. said it will open its first store in China this month, entering a field already crowded with local low-cost competitors.
The move into China by the U.S.'s largest consumer-electronics chain caps a year in which many foreign retailers have entered or expanded operations in the country, encouraged by loosening regulations on the retail sector that China pledged as part of its entry into the World Trade Organization five years ago. Foreign retailers are keen to participate in the world's fastest-growing economy and tap its expanding pool of middle-class consumers.
But parts of the retail sector are already quite competitive. China's $38 billion home-appliance market is a cutthroat business, dominated by local companies offering items such as $15 DVD players and $30 microwaves to China's cost-conscious consumers. Large Chinese chains, such as Gome Electrical Appliances Holding Ltd. and Sunning Electronics Group Co., operate on wafer-thin profit margins of between 1% and 3%.
Best Buy signaled its intention to enter China in May with the $180 million purchase of a majority stake in Jiangsu Five Star Appliance Co., China's fourth-largest consumer-electronics retailer. The move sparked a flurry of consolidations and acquisitions in the sector.
In July, Gome, China's largest electronics retailer, offered to acquire China Paradise Electronics Retail Ltd., the third-largest player, for $660 million. If the deal goes through, it will double Gome's number of stores. China Paradise later, in August, reported an 89% plunge in first-half net profit because of price competition from rivals.
Ellen Wang, a project manager for Best Buy, says the company will distinguish itself from competitors in China by staffing the store with Best Buy employees paid regular salaries, not sales commissions. Many other electronics retailers in China are staffed with promoters who work for vendors. Best Buy also will sell a mixture of home appliances and digital products such as cellphones and MP3 players. In China these products are often sold at separate locations.
While announcing second-quarter results in September, Best Buy said it expects annual gross margins to be constrained by the smaller margins of its Jiangsu Five Star acquisition in China.
