As Best Buy’s ‘Five Star’ exits China, more foreign retailers jump in
May 5, 2013 Leave a comment
As Best Buy’s ‘Five Star’ exits China, more foreign retailers jump in
Staff Reporter
2013-05-04
Foreign electronics retail giants such as Best Buy and Wonder City have repeatedly faced setbacks in China, but this hasn’t extinguished their enthusiasm as RadioShack approaches the mainland market, IT Times Weekly reports.
On March 18, consumer electronics retail giant Best Buy announced that Wang Jian, president of Five Star Appliance, its wholly owned subsidiary in China, will leave his post, though he will continue as a senior adviser for a smooth transition to help the new leadership until the end of June.
Wang’s departure means Best Buy’s “Five-Star era” has come to an end, as the subsidiary it bought in 2009 didn’t satisfy the parent company, insiders said. Best Buy will have to rethink its development strategy in China.In February, Wonder City, the joint venture between European electronics retailer giant Media-Saturn and Taiwan’s Foxconn Technology Group, announced it would close its seven stores in Shanghai. When Wonder City launched in November 2010, it announced it would invest US$200 million within two years to set up more than 10 stores in Shanghai, and planned to expand its stores to the whole China by setting up more than 100 outlets.
Nonetheless, RadioShack, the second-largest US electronics retail brand, recently said after a test run in China for one year that it would set up 500 stores in China within three years, introducing its convenience store model into the mainland.
Costco, the third-largest US retailer, also plans to enter China via its e-commerce division. Macy’s Department Store also decided to enter the Chinese mainland market, the report said.
Five-Star’s Wang denied speculation that his resignation was because of problems with Best Buy’s management and slowing sales growth, saying he quit for personal reasons. Wang’s remarks should not be taken at face value however, according to the report. Last year, Five Star announced it would open 50 new stores within a year, but as of the end of last year, it had opened just four, bringing the total to 213 stores.
Best Buy’s 2013 revenues reached US$49.62 billion, down from US$50.04 billion a year earlier. Its latest quarterly report showed its international sales in the quarter fell 6.6% from a year earlier, chiefly due to declining sales in Canada and China, the report said.
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