Best Buy Getting Schooled in China

Two stories published this week about Best Buy’s operations in China paint disparate pictures of the company’s future in the market. The US electronics retail giant opened its first store in China in 2006, but apparently has fallen well short of its goals.

First, in a piece in Fortune magazine published yesterday. which appears inspired by a PR department’s efforts to put a bright face onto an upcoming repositioning, the company emphasises the need to go slow and learn from its local subsidiary, Five Star Appliance, which the company purchased a 75% stake in as part of its market entry strategy.

In another article published the same day, COMTEX reported that Best Buy is attempting to choose between pursuing a discounting strategy for its stores in China, or retreating from the market altogether.

This case of a major international retail brand struggling to build market share and profits in China could end up being a case study for the many foreign retailers currently crowding into the country’s malls and shopping centres.

In any case, Best Buy’s attempt to offer a more organised, international-style approach to electronics retailing seems to be wilting in the face of lower priced local competitors.

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