Electronics giant Best Buy calls it quits (2)

Compared with domestic players, Best Buy purchases property and goods and hires staff by itself, which makes the investment in the first stage huge, resulting in a bigger risk, Chen Can, a senior analyst from Analysys International, yesterday told the Global Times.
"In China, domestic home appliance players such as Gome and Suning often get the goods from the suppliers first, then pay for them much later," said Chen.


Further, insiders said the limited number of chain stores and a weak relationship with suppliers made Best Buy's prices higher.
"Our outlets had many window shoppers, mainly attracted by the retail experience we offered,"said Fang Zhong, a shop assistant who worked at the Xujiahui store in Shanghai for four years.
"So many potential customers came to our store to check and compare products, but they don't necessarily make purchases here. They go online to buy cheaper priced items," Fang said.
Figures from China Chain Store & Franchise Association show that in 2009, sales volume of Best Buy's six stores in Shanghai was about 1 billion yuan ($151.93 million).
However, in the first half of 2010, the net profit of Suning Appliances saw growth of 56 percent to 2 billion yuan ($303.85 million). In 2010 alone, it opened 200 stores.
"The rivals are too strong, and Best Buy has come into China a little late, which squeezed its (prospects) further," Liu Buchen, an independent home-appliance analyst, yesterday told the Global Times.