Best Buy announced that its first store in China will open this month. The massive retailer is already the largest consumer-electronics chain in the U.S., though it will face stiff competition in China’s $38 billion home appliance market. Existing competitors such as Gome Electrical Appliance or Sunning Electronics already work with extremely thin profit margins of 1% to 3%. It’s not uncommon to find DVD players for as little as $15. So how is Best Buy going to compete?
Project manager Ellen Wang explains that
Best Buy
will make sure its employees “understand customers’ real needs in stead of selling
high margin products.” Most electronics retailers in China are full of product promoters who work for vendors. So
Best Buy
plans on staffing the store with employees who are paid regular salaries rather than sales commissions.
Also, the company plans on having a competitive advantage through offering home appliances and digital products (cellphones, mp3 players, etc.) all under the same roof. These items are traditionally sold in separate locations in China.
My question: Even if you can buy your washing machine and mp3 player from non-commissioned employees at the same store… Would you if it’s more expensive?
*Update* More news from China… Google announced that Google China Vice President Johnny Chou will resign Dec. 31 “to pursue personal interests.” China is the world’s second largest Internet market behind the U.S. And Google currently is responsible for only 16% of Internet advertising in China despite a strong push this year to gain market share.
China looks to be a tough ride for U.S. tech-related companies.
