Top U.S. electronics retailer Best Buy Co, facing stagnant sales at home, said on Friday it would ramp up its expansion in China but would not grow through partnerships with local rivals.
Best Buy will invest substantially and open a large number of stores in China in the next five years, and will launch online sales in the country in the next 24 months, Bob Willett, chief executive officer of Best Buy International, said in an interview. He declined to give specific figures.
Willett denied Chinese media reports that Best Buy was in talks on a possible share swap with GOME Electrical Appliances Holdings Ltd, China's top electronics retailer.
(We are) not in the process of having any talks with GOME or other Chinese retailers on cooperation, he said.
Last week, Best Buy cut its full-year outlook, citing a softer U.S. economy, but remained ambitious in its expansion plans, aiming to increase the number of its stores in China by about 20 percent to as many as 193 in its 2009 fiscal year, which ends on March 1 next year.
The new stores planned in China include 20 to 25 Five Star stores and five to eight self-branded stores. All new Best Buy-branded stores will be based in or around Shanghai, where the company opened its first and only such store in China in early 2007.
Best Buy, which bought a majority stake in Jiangsu Five Star Appliance Co in 2006, will boost its ownership of the company to 100 percent by the end of 2010 as part of the purchase agreement, Willett said.
Best Buy faces tough competition in China from GOME and Suning Appliance Co 002024.SZ, the country's second-largest electronics retailer.
Five Star now has 159 outlets, mainly in eastern China, while GOME has more than 600 shops and Suning more than 400 nationwide.
We started carefully and slowly initially, to understand the Chinese market, Willett said. We are now ready to scale up store expansion.
Best Buy is also looking to expand into new markets such as India, but has no concrete plans yet, Willett said.
Under the plan disclosed last week, Best Buy will add 90 to 110 stores in the United States, and 38 to 49 stores in overseas markets including China, Canada and Mexico in fiscal year 2009.
(Reporting by Samuel Shen; Editing by Edmund Klamann)