How is the Chinese competition looking at Best Buy's entrance?


With the largest consumer electronics retailer in the U.S. -- Best Buy Co., Inc. (NYSE:BBY) -- now having a presence in China, are the consumer electronics retailers in that country scared and confused? By all counts, hardly. Best Buy's largest-ever store was constructed in one of Shanghai's most popular commerce districts and it will certainly turn heads and wallets, but will customer shun it in favor of local establishments?

The top-two appliance chains in China, Gome and Suning, have not really responded in official terms to Best Buy's entrance into their home turf. Are they scared, not scared, or not even wanting to acknowledge that a new (and foreign) competitor has entered their market? It's been said that Gome sped up a takeover from a rival chain in response to Best Buy's pending Chinese launch, and the chain also blocked Best Buy from taking over a commercial space in Beijing just five months ago.

Those are signs of classic protectionism, and why shouldn't they be? Any entrenched competitor would want to ward off the new kid on the block until the last minute and try to ensure customers don't defect as soon as they can. But the "entrenched" numbers will make it hard for Best Buy to inflict any kind of huge damage for now, as Gome and China Paradise have more than 800 stores, and Suning has more than 430 outlets across the country. Compare that to one store for Best Buy and you see that a long, uphill battle is on the way.
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Last updated: February 13, 2012: 08:04 AM

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