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The recent news says that the U.S. consumer electronics retailer Best Buy is thinking of selling its subsidiary brands “Five-Star Home Appliance”and “Best Buy Mobile” in China as the final step to completely leave the Chinese market.
According to the insider of Best Buy， this U.S. company is going to stay firmly with the U.S. market， and the deals in China might bring Best Buy about US$300-million capital in return.
Three years ago， Best Buy， which failed to get used to the Chinese market， was forced to close outlets and laid off employees massively in China. At that time， there is always the news about Best Buy’s plan to leave China. However， Best Buy， which used to consider the Chinese market as one of the fastest growing markets in the past eight years， was quite reluctant to give up this market. It has taken several measures to turn around the situation， such as buying the Chinese local brand “Five-Star Home Appliance” and deploying Best Buy Mobile in China. Unfortunately， these efforts only brought about the poor performance.
Best Buy’s crisis is not limited in China. Downplayed by its poor performance in China and Europe， Best Buy’s global revenue kept dropping. Its paradise in the U.S. is shaking as well since Amazon， eBay and other online retailers are eating away its market shares.
The same situation can also be seen in China. Suning and Gome are unbeatable opponents for Best Buy in this country. Tmall， JD.com and other B2C dealers are marching forward aggressively.
True or False？
The powerful enemies in China render Best Buy susceptible to the poor performance in this country. Therefore， it is widely believed to be a wise choice for Best Buy to sell its assets in China and end its eight-year suffering in this country.
However， the PR director of FiveStar Home Appliance， said on July 9 that all news about Best Buy’s selling assets is nothing but the rumor. He stresses that Five-Star Electronics is committed to redecorating and upgrading the 11 flagship stores， a convincing mark for the healthy development of Five-Star Home Appliance.
Whether Best Buy’s plan to leave China is true or false remains unknown， but it is undeniable that the company is suffering globally. According to its financial report， Best Buy got the revenue of US$9.035 billion in the first quarter of 2014， lower than the US$9.347-billion income in the same period of last year. In the U.S.， the same-store sales dropped 1.3% due to the depression in the consumer electronics market. The company has already expected the continuous drop in the same-store sales in the second and third quarters. In the middle of last year， Best Buy quitted the European market by selling 50% of its shares to its British partner Carphone Warehouse. The leaving from the European market of Best Buy is an important reason for others guess that Best Buy’s next step is to sell its business in China.
Analysts point out that leaving China has both benefits and defects for Best Buy. On one hand， the company is going to lose the fast growing Chinese market. On the other hand， Best Buy is able to concentrate its resources and efforts to save the situation in the U.S. market.
This is because the Chinese market was never the major contributor to Best Buy’s development. It is known that Best Buy’s business in China contributed 3.5% of its global revenue in 2013， lower than the 4.1% proportion in 2011.
Eight Years’ Struggle
Best Buy’s poor performance in China is related to its failure to get used to the Chinese market.
In 2006， Best Buy began its full deployment in China. It spent US$180 million acquiring 75% stakes of FiveStar Home Appliance， thusly changing its role as a simple purchaser in China. In 2009， Best Buy acquired the rest 25% stakes of Five-Star Home Appliance. It also launched Best Buy-branded products. However， at the beginning of 2011， Best Buy closed its nine outlets in China and laid off all employees， handing over all its Chinese business to Five- Star Home Appliance.
The company has been silent for half a year since then. In July 2011， it announced the plan of returning to the Chinese market with the pattern of“physical stores and ecommerce”. But the implementation of this plan was delayed to December and then stranded again till June 2012， when Best Buy Mobile was launched in China.
In 2013， Best Buy announced the resignation of Wang Jian， president of Five-Star Home Appliance. Along with the news was the appointment of Zhou Meng as Five-Star Home Appliance’s CEO and president of Best Buy China. However， few people thought highly of Best Buy’s new leader in China since the overall depression of home appliance in China and Best Buy’s unfamiliarity with the Chinese market are hard to be changed overnight.
After the closure of the outlets in China， Best Buy’s development in China fall onto the shoulder of FiveStar Home Appliance， which set up its first store in Nanjing， Jiangsu in 2001. From 2005 to 2011， Five-Star Home Appliance embraced its golden age of high-speed development， especially after being acquired by Best Buy. In 2012， the company had already had 219 outlets in China.
The fast development inspired both Five-Star Home Appliance and Best Buy. In 2011， the company fixed a fiveyear development plan， hoping to increase the number of outlets to 546 by 2015 with the 20% annual growth rate.
However， Five-Star Home Appliance only has 193 outlets in China at present， 26 fewer than three years ago and 70% fewer than the original plan.
The PR director says that Five-Star Home Appliance is no longer going to make any plans about the number of outlets. It will set up new outlets in good property projects and excellent business circumstance.
According to the insider of Best Buy， this U.S. company is going to stay firmly with the U.S. market， and the deals in China might bring Best Buy about US$300-million capital in return.
Three years ago， Best Buy， which failed to get used to the Chinese market， was forced to close outlets and laid off employees massively in China. At that time， there is always the news about Best Buy’s plan to leave China. However， Best Buy， which used to consider the Chinese market as one of the fastest growing markets in the past eight years， was quite reluctant to give up this market. It has taken several measures to turn around the situation， such as buying the Chinese local brand “Five-Star Home Appliance” and deploying Best Buy Mobile in China. Unfortunately， these efforts only brought about the poor performance.
Best Buy’s crisis is not limited in China. Downplayed by its poor performance in China and Europe， Best Buy’s global revenue kept dropping. Its paradise in the U.S. is shaking as well since Amazon， eBay and other online retailers are eating away its market shares.
The same situation can also be seen in China. Suning and Gome are unbeatable opponents for Best Buy in this country. Tmall， JD.com and other B2C dealers are marching forward aggressively.
True or False？
The powerful enemies in China render Best Buy susceptible to the poor performance in this country. Therefore， it is widely believed to be a wise choice for Best Buy to sell its assets in China and end its eight-year suffering in this country.
However， the PR director of FiveStar Home Appliance， said on July 9 that all news about Best Buy’s selling assets is nothing but the rumor. He stresses that Five-Star Electronics is committed to redecorating and upgrading the 11 flagship stores， a convincing mark for the healthy development of Five-Star Home Appliance.
Whether Best Buy’s plan to leave China is true or false remains unknown， but it is undeniable that the company is suffering globally. According to its financial report， Best Buy got the revenue of US$9.035 billion in the first quarter of 2014， lower than the US$9.347-billion income in the same period of last year. In the U.S.， the same-store sales dropped 1.3% due to the depression in the consumer electronics market. The company has already expected the continuous drop in the same-store sales in the second and third quarters. In the middle of last year， Best Buy quitted the European market by selling 50% of its shares to its British partner Carphone Warehouse. The leaving from the European market of Best Buy is an important reason for others guess that Best Buy’s next step is to sell its business in China.
Analysts point out that leaving China has both benefits and defects for Best Buy. On one hand， the company is going to lose the fast growing Chinese market. On the other hand， Best Buy is able to concentrate its resources and efforts to save the situation in the U.S. market.
This is because the Chinese market was never the major contributor to Best Buy’s development. It is known that Best Buy’s business in China contributed 3.5% of its global revenue in 2013， lower than the 4.1% proportion in 2011.
Eight Years’ Struggle
Best Buy’s poor performance in China is related to its failure to get used to the Chinese market.
In 2006， Best Buy began its full deployment in China. It spent US$180 million acquiring 75% stakes of FiveStar Home Appliance， thusly changing its role as a simple purchaser in China. In 2009， Best Buy acquired the rest 25% stakes of Five-Star Home Appliance. It also launched Best Buy-branded products. However， at the beginning of 2011， Best Buy closed its nine outlets in China and laid off all employees， handing over all its Chinese business to Five- Star Home Appliance.
The company has been silent for half a year since then. In July 2011， it announced the plan of returning to the Chinese market with the pattern of“physical stores and ecommerce”. But the implementation of this plan was delayed to December and then stranded again till June 2012， when Best Buy Mobile was launched in China.
In 2013， Best Buy announced the resignation of Wang Jian， president of Five-Star Home Appliance. Along with the news was the appointment of Zhou Meng as Five-Star Home Appliance’s CEO and president of Best Buy China. However， few people thought highly of Best Buy’s new leader in China since the overall depression of home appliance in China and Best Buy’s unfamiliarity with the Chinese market are hard to be changed overnight.
After the closure of the outlets in China， Best Buy’s development in China fall onto the shoulder of FiveStar Home Appliance， which set up its first store in Nanjing， Jiangsu in 2001. From 2005 to 2011， Five-Star Home Appliance embraced its golden age of high-speed development， especially after being acquired by Best Buy. In 2012， the company had already had 219 outlets in China.
The fast development inspired both Five-Star Home Appliance and Best Buy. In 2011， the company fixed a fiveyear development plan， hoping to increase the number of outlets to 546 by 2015 with the 20% annual growth rate.
However， Five-Star Home Appliance only has 193 outlets in China at present， 26 fewer than three years ago and 70% fewer than the original plan.
The PR director says that Five-Star Home Appliance is no longer going to make any plans about the number of outlets. It will set up new outlets in good property projects and excellent business circumstance.