Two workers erect a promotion banner outside a Gome Electrical Appliance Holding Ltd store in Shanghai. The electronics retailer will open 480 outlets around China in 2011. [Photo / Bloomberg]
BEIJING - Gome Electrical Appliances Holding Ltd, China's biggest electronics retailer by revenue, said on Monday that its net profit in 2010 rose 39 percent from a year earlier to 1.96 billion yuan ($299 million) and announced a new expansion strategy.Gome said that revenue last year rose by 19 percent to 50.91 billion yuan.
"To maintain our leading position in the industry, we will open more stores and establish large-scale logistic bases in second-tier cities this year," said Zhang Dazhong, Gome's chairman.
The announcement came a few weeks after the resignation of former chairman Chen Xiao, who focused on improving the earning potential of every store instead of strengthening efforts to open more outlets.
Chen was replaced by Zhang Dazhong, the 62-year-old founder of Beijing Dazhong Electric Appliances Co, which Gome acquired in 2007.
Chen's resignation ends a lengthy power dispute between he and founder Huang Guangyu, who is now serving a 14-year sentence for bribery.
Sun Yiding, executive director of Gome, "has resigned from the company for personal reasons", Zhang said.
"The management team structure will remain stable in the future," he said.
He Yangqing, vice-president of Gome, said the Hong Kong-listed company will open 480 outlets in 2011. Last year, Gome opened 139 outlets, while 39 others were closed because of weak earnings.
Wang Junzhou, president of Gome, said 60 percent of the new outlets this year will be in China's second-tier cities.
Sales growth of electronic appliances in the second-tier cities is expected to be much faster than in large cities such as Beijing and Shanghai, due to the government's 12th Five-Year Plan (2011-2015), part of which focuses on stimulating consumer markets in rural areas.
According to Gome, sales of electronic appliances in second-tier cities will occupy more than 50 percent of the domestic electronic appliance market.
Gome said the company will also open more stores in Shandong and Sichuan provinces.
"Gome also plans to tap into e-commerce operations with the launching of its own online sales platform in April," Zhang said.
Gome entered the e-commerce market by acquiring an 80-percent stake in Coo8.com, a business-to-customer home appliances online store for 48 million yuan in November.
