Foreign home appliance retailers trapped in Chinese circles

In the current super-competitive era of China's home appliance market, foreign home appliance stores and local home appliance stores are on a different path.

â–  Foreign investment

This time, Best Buy has "spread things" in Europe.

On April 30th, Best Buy, the world’s largest home appliance retailer, issued a statement claiming that it will sell its 50% stake in its European joint venture to the partner Kavon-Villehaus Group. The transaction price is approximately US$775 million. Will be completed in cash. The Kavon-Wiellhouse Group is the largest mobile phone retailer in Europe. In 2008, Best Buy Europe was established with Best Buy and stores were established in eight European countries.

It is reported that the Board of Directors of both Best Buy and Kafv-Walhaus Group have approved the transaction, but they also need to obtain the approval of shareholders of the Kavon-Villehaus Group. The transaction is expected to be completed by the end of June this year.

Even if it is a transaction far away, there are still foreign analysts who are involved in the fate of Best Buy China. According to Anthony Chukumba, an analyst at BB&T Capital Markets, Best Buy is operating in China rather than in Europe.

This is indeed the case. As early as 2003, Best Buy set up an office in Shanghai, but it was not until 2006 that Best Buy acquired a 75% stake in local brand Fivestar Electronics Co., Ltd. with a price of US$180 million. The curve entered the Chinese market and Best Buy was launched in Shanghai. China's first store; followed by a full two years, the second store was difficult to be born; in February 2011, Best Buy announced the closure of the Huamen store, the business will be given to five-star electrical appliances. At this point, Best Buy has only 9 stores in China. Even if we counted the scale of the five-star electronics store at about 170 stores, it would be a far cry from Suning and Gome.

“Transition” appeared in June last year. Best Buy opened “Best Buy Mobile” in the Chinese market in the form of a store-in-shop, which mainly sells mobile terminal products such as smart phones and tablet PCs. In this way, Best Buy “returns to” the Chinese market. However, this return is not gorgeous. In the most recent fiscal year, the Chinese business contributed only 3.5% of the revenue to Best Buy, and 4.1% of the revenue for the previous year.

And when the stimulus of the good news failed to fully ferment, another negative news followed. On March 18th this year, one of the founders of Five Star Electronics and Wang Xing, CEO of Five Star Appliances, suddenly left the company without publicizing their successors. The top leadership position in Best Buy China business has been left vacant for more than one month, causing external changes in Best Buy's strategy in China. Guess.

Although the new CEO has taken office recently, Best Buy has clearly stated that it will not withdraw from the Chinese market, but its development in China is still not optimistic. “Best Buy will also dispose of assets in China later this year. There is no strategic advantage for China to plan for Best Buy,” said Anthony Chukumba.

If we count the Windtown store that was shut down not long ago, the weakness of foreign home appliance stores in China has been uncontroversial.

In November 2010, the home appliance chain brand Wonder City, a joint venture between Foxconn and the world's second largest wholesale and retail company, Metro, officially opened its first store in Shanghai; in March 2013, as the parent company of Windtown, Metro It proactively announced that Wande City’s business in China will end, and that “in 2013, it will step out of Shanghai and will be able to reach 100 stores in 2015”.

It has to be said that foreign home appliance retailers are caught in the turmoil of the Chinese market. Best Buy, Wonder City, and Yamada, one of the world’s largest home appliance chain giants, and the other two are the largest home appliance chain retailers in Europe and Japan, and both have taken the second place in the world, but these In the capital, management, operations, talents and other aspects of the big brothers who have advantages, after all, who could not break the curse of foreign home appliance chain in China.

â–  Local exploration

Compared to foreign home appliance stores that are busy contracting, home appliance stores are busy looking for ways to attack.

From the perspective of first-tier brands, Suning and Gome have all chosen the “going to electrical” strategy, pursuing the diversified expansion of business categories, and transforming from the traditional 3C and home appliance fields to department stores and other fields. In addition, both parties have accelerated the e-commerce transformation process.

In the case of Gome, at the end of last year, Gome announced its corporate strategic plan for 2013-2015. At the time, Guo Junzhou, the president of Gome, made it clear that the word "electricity" in the brand name was only diluted, emphasizing only the brand name of Gome. For the purpose of this article, Wang Junzhou's explanation is to further broaden the offline merchandise and extend it beyond the category of electrical appliances. In particular, in the area of ​​e-commerce, “de-electricity” can reduce users’ misunderstandings and quickly and effectively develop Gome Online.

In other words, in the final analysis, coordinated development on and off the line is the pursuit of the Gome strategy.

In fact, Gome's recent moves in the field of e-commerce are indeed quite frequent. In December 2012, Gome officially announced that it will integrate its two major e-commerce platforms, Gome Online Mall and Kuba Website, to conduct data docking and integration in the background, but the front desk still retains two domain names, from the previous "double The system + dual-brand" became "single-system + dual-brand" and was uniformly designated as Gome Online.

Subsequently, Gome Online took a major step in the adjustment of personnel. In January of this year, Gome Online implemented internal layoffs involving a total of 200 people, aiming at "reducing redundant posts and implementing internal optimization." However, there is also a wide range of data circulating in the industry that has not been verified by Gome. At the end of January, Gome Online has conducted three layoffs, involving nearly 400 people.

Changes quickly spread to the top. Wang Yequan, founder of the original Kuba Network, and the founder of Gome's e-commerce business, Gome Online's CEO Han Depeng, left the company. After that, only from the group level to the Gome e-commerce giants began to move from the backstage to the stage.

Although in many people’s eyes, Gome’s move is not a good move, but a series of moves in the field of GOME’s e-commerce business from April has also attracted attention and achieved some results.

According to Peng Liang, a spokesperson for Gome Online, after GOME's "Most Strong Store" opened, daily sales have doubled over the previous month, setting a record of 250 million yuan a day on the day of "4.18". . After the final big promotion on the anniversary of May 8th, Gome Online's two-year anniversary event set a new record. The total monthly sales amounted to more than one billion yuan, an increase of nearly five times that of last year's April sales.

In the second and third line brands, many companies are also seeking various ways to break through. Among them, there are many companies that use the franchise chain to expand in the form of "light assets" to better respond to the third and fourth-line markets; there are also high-profile companies like Huiyin that rely on the capital market to create the largest urban electricity supplier. Platform, deep-growing players in the rural market.

Have to say, compared to foreign home appliance stores reveal the frustration, hopelessness, the performance of local brands really a lot of sunshine.