By Kirby Chien and Edwin Chan
BEIJING (Reuters) - Gome Electrical Appliances Holdings Ltd. (0493.HK: Quote, Profile, Research, Stock Buzz), China's top retailer of household electronics, is slowing its breakneck expansion to focus on beefing up the profitability of its stores.
GOME, which agreed in July to buy out Paradise Electronics Retail Ltd. 0503.HK for about $680 million, said it expected to wrap up the deal by November and take its web of stores across the country to more than 700, including its unlisted parent, Chairman Huang Guangyu said at the Reuters China Summit.
That deal is seen spurring more takeovers in a fragmented, $840 billion retail sales arena Beijing hopes will expand 12 percent annually.
But Huang, ranked as China's richest man by Hurun Report with a fortune of $1.7 billion, said he was in no hurry to go shopping again so soon.
Sure, GOME has said it would sacrifice profitability in favor of ramping up its network to as many as 1,000 stores in coming years and capturing market share. But, like other Chinese companies, it is starting to look at the bottom line.
"In this industry, if you don't run quickly enough you'd get killed," said Huang. "We'll look at the network and adjust store locations, sizes and so on -- improving quality. It's no longer a matter of rapid-fire store expansion.
GOME, along with stores it operates for its unlisted parent of the same name, set up 200 outlets in 2005. But so have others, depressing profits for the industry.
"It's not a good thing. You open one, I open one, everything gets more intense," said Huang, who arrived in a jet-black Mercedes stretch limousine. Continued...
© Thomson Reuters 2008. All rights reserved.
| Paper | Aug 20 - 21, 2008 | Manufacturing |
| Japan Investment | Jul 01 - 2, 2008 | Country Summits |
| Global Real Estate | Jun 23 - 25, 2008 | Real Estate |
| Consumer and Retail | Jun 16 - 18, 2008 | Consumer Retail |
| Investment Outlook | Jun 09 - 12, 2008 | Financial Services / Exchanges |
