Foreign home appliance chain returned to China to buy out of mode

In the past, foreign home appliance chains that were dissatisfied with the soil in the mainland seemed to have finally learned how to survive, and accelerated their business in China. Suning Appliance, a giant in the home appliance chain, recently announced its introduction of Laox, a Japanese home appliance chain company, to 150 new stores in China within five years. According to media reports, Best Buy is also brewing to resume the Chinese market, and is expected to open another new store in Shanghai this year.

The influx of foreign-invested stores has made the home appliance chain market, which has already become fierce competition, more tense. However, the home appliance chain no longer has the sense of crisis of “wolf”.

Foreign chains influx

The world's largest home appliance giant Best Buy, which entered China in 2006, announced its withdrawal from China in February this year. Compared to Suning and Gome's thousands of new stores, the number of Best Buy stores in 10 stores is indeed a bit embarrassing. However, Best Buy’s defeat does not seem to have driven out the determination of other foreign-owned stores to enter China.

In November 2010, Metropolis, which Maron and Foxconn married, first settled in Shanghai; in February and June this year, Windtown opened two stores in Shanghai. According to the plan of Wande City, the number of stores in Shanghai will reach 10 in 2012. By 2015, the number of stores in the country will exceed 100.

In December last year, Yamada Denki, the overlord of the Japanese home appliance chain industry, opened its first store called "Amada Electric" in Shenyang. In June this year, it opened another new store in China in Tianjin. “In the next three years, Yamada Denki plans to open five stores in China. Yamada Denki will achieve a turnover of 100 billion yen (about 8 billion yuan) in China,” said Yamada Denki Co., Ltd. president.

Buyout mode is not acceptable

Interestingly, from Best Buy to Yamada Electric, foreign home appliance chains entering China are adopting a "buy out operation" model. And Best Buy withdrew from the Chinese market, and the industry agreed that it is related to Best Buy’s insistence on a “cash-out” business model.

The profit model of the domestic home appliance chain industry has been collectively referred to as “flight refueling” in the industry, that is, after purchasing first and then paying, this kind of store can default on the supplier's payment to open a new store's low-cost expansion model. Best Buy uses the method of paying the money first and then picking up the goods. This approach will not only occupy the capital chain of the store, but once the goods are sold, the store will have to bear it. In addition, Best Buy's sales staff are their own employees, and local stores can use more home appliance business employees. This way, Best Buy's operating costs are much higher than those of home appliance stores.

Whether or not Wande City and Yamada Denki can successfully overtake in the "buy out of business" model becomes an aspect to watch.

Domestic chain: we are not afraid

Foreign-funded stores are rampant, and domestic home appliance chains do not seem to worry this time.

"When Best Buy came in, we felt it was indeed a wolf. But now the situation is reversed, and there is no fear of foreign-owned stores." He Yangqing, vice president of Gome, said that China's home appliance chain has its own advantages and characteristics. “First, China has become a large base for the manufacture of home appliances. We have a 20-year history of cooperation with local manufacturing companies. The relationship is very solid. The advantage of foreign-owned chains may be international brands, but now international brands also set up production bases in China. The advantages of the market no longer exist, and local shopping malls implement low-cost strategies and high consumer loyalty.Second, since 2004, scarce resources in various cities have been occupied by local home appliance chains.The primary and secondary markets are already very saturated, and foreign-owned stores It will be very difficult to find a good property."

“This year is a crucial year for the subdivision of the chain market.” He Yangqing said that Gome and Suning have long been conducting fine classification and exploring new models.

Liu Buchen said that in the future, China’s home appliance sales market will inevitably be a monopoly of home appliances, just like Best Buy in the United States.