Best Buy, the largest consumer electronics retailer in the US, plans to add between 20 and 23 stores to its Five Star chain in China during the next 12 months.
Best Buy bought Jiangsu Five Star Appliance, China's fourth largest
retailer, last year in a bid to accelerate its expansion in China —
see this EngagingChina story for more. Five Star currently has around 140 stores in China.
Best Buy appears to be sticking to its two-pronged branding strategy
in China, in which it will open stores under both the Five Star and
Best Buy fascias.
China's first Best Buy-branded store recently opened in Shanghai and
the company plans to open two or three new ones in the next year and a
half. By 2010, Best Buy plans to generate a phenomenal $100bn in annual
sales for China.
Another leading US retail chain, Toys 'R Us, also recently opened its first store in China and, according to Shaun Reid, of the China Market Research Group, the time is ripe for western brand-name retailers to succeed in the PRC.
In a recent SeekingAlpha story,
Reid argues that the increasing sophistication of Chinese consumers
means they are more likely to be disappointed both by the selection of
goods and the overall shopping experience at China's home-grown
retailers such as Guomei, which specialises in electronics.
According to a recent survey conducted by CMRG, Chinese shoppers
like being able to touch products and compare brands side by side in a
store like Best Buy — in sharp contrast to the aggressive tactics used
by salespeople at a store like Guomei.
But some western brand-name retailers are not so welcome in the
Middle Kingdom. Starbucks, for example, has been the target of a small
but persistent online campaign by a Chinese TV anchorman who sees the
coffee giant's presence in the Forbidden City as an example of western
“trampling” on Chinese culture. More here.
Starbucks has also been involved in disputes with rival coffee stores in China which copy the Starbucks logo and signage.
Nevertheless, Starbucks is bullish on China and in a recent analyst
conference call, chairman Howard Schultz talked about the “many unique
opportunities to further enhance the Starbucks experience” ahead of the
Olympic games in Beijing.