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Wed, Aug 30, 2006 - Page 10 News List

Best Buy to expand into China

BOLD MOVE The US-based electronics retail giant will attempt to compete in one of Asia's most saturated markets by partnering with Jiangsu Five Star Appliance Co


China's overcrowded consumer electronics market will get yet a new dose of competition when US retailer Best Buy Co opens its first outlet in China, likely by year's end.

Best Buy is teaming up with local partner Jiangsu Five Star Appliance Co (江蘇五星電器), China's No. 4 appliance and consumer electronics retailer, in opening a store in Shanghai's busy Xujiahui shopping district.

"We will open the first store hopefully toward the end of the year by December," Bob Willett, Best Buy's chief executive officer, told reporters yesterday.

"But we're only going to open when it's right," he said. "This is not a race."

Best Buy, based in Minneapolis, Minnesota, is the biggest US consumer electronics retailer. It announced in May that it paid US$180 million for a majority stake in Jiangsu Five Star, giving it an immediate presence in Asia's fastest growing market.

China is also one of Asia's most saturated markets, where appliance retailers and manufacturers compete amid brutal price wars and rampant piracy of technology and brand names.

As foreign retailers like Best Buy and Wal-Mart Stores Inc make inroads into China, local retailers are fighting back. China's No. 1 consumer electronics retailer, Gome Electrical Appliances Holding Ltd (國美電器) made an offer in July to buy Hong Kong-listed China Paradise Electronics Retail Ltd (中國永樂電器), the country's third largest seller of electric appliances.

Best Buy is concentrating on researching the market and recruiting and training staff before making its next move in China.

"We are still learning about this marketplace," Willett said. "The Chinese consumer is pretty unforgiving if we get it wrong."

Market research shows Chinese consumers are spoiled for choice, facing a bewildering array of products in almost every area.

But appliance outlets are often dingy, smoke-filled malls with dusty displays chock-a-block with substandard products. And free after-service or installation is virtually nonexistent.

Willett hopes Best Buy will win over picky Chinese customers with pleasant outlets and helpful, dependable service.

"Best Buy is very much about service," he said. "When we sell something we make you a promise that it will work, we'll warrantee it and teach you how it works."

Best Buy, which has outlets in Canada, is looking beyond North American and China to other markets, Willett said. But he denied reports the company was discussing potential acquisitions as it mulls further overseas expansion beyond Canada and China.

"We are looking at other countries, though I'm not going to talk about which ones," he said.

"We're not in talks with anyone today about buying anything today," he said.

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