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Suning, HP seal US$732m deal
By Joyce Pan |
July 29, 2009, Wednesday
|
Print Edition
Print Edition
CHINA'S Suning Appliance Co signed a strategic agreement with Hewlett-Packard yesterday to sell 5 billion yuan (US$732 million) worth of HP computers in three years as it aims to become a leading retailer of computers, communication goods and consumer electric products.
The deal with HP comes as competition heats up among electric appliance retailers in the lucrative 3C products market, which has become a new battle field due to its fast growing pace and high profit margins.
Suning, a home appliance retailer, and rival Gome Electrical Appliances Holding have ambitions to become a leading retailer in the 3C market through tie-ups with manufacturers.
"The consumer electric goods sector, including computers, is the biggest driver for future growth in the domestic market," said Sun Weimin, president of Nanjing-based Suning. "It has also been one of our most significant businesses in recent years."
The deal signified a closer partnership as HP, the world's largest computer maker, will supply directly to Suning. The direct supply model will lift profit margins of both firms and offer consumers lower prices as distributors and agents are left out. Suning and HP targeted sales of 1.5 billion yuan this year.
It is the first direct supply agreement between HP and Chinese retailers but the direct cooperation business is already very popular in Western countries. Industry watchers forecast the direct model will spread in China.
Suning has seen computer sales volume double since 2007 to over 5 billion yuan last year, nearly 10 percent of its total revenue. It is set to post computer sales of 7 billion yuan this year.
The deal with HP comes as competition heats up among electric appliance retailers in the lucrative 3C products market, which has become a new battle field due to its fast growing pace and high profit margins.
Suning, a home appliance retailer, and rival Gome Electrical Appliances Holding have ambitions to become a leading retailer in the 3C market through tie-ups with manufacturers.
"The consumer electric goods sector, including computers, is the biggest driver for future growth in the domestic market," said Sun Weimin, president of Nanjing-based Suning. "It has also been one of our most significant businesses in recent years."
The deal signified a closer partnership as HP, the world's largest computer maker, will supply directly to Suning. The direct supply model will lift profit margins of both firms and offer consumers lower prices as distributors and agents are left out. Suning and HP targeted sales of 1.5 billion yuan this year.
It is the first direct supply agreement between HP and Chinese retailers but the direct cooperation business is already very popular in Western countries. Industry watchers forecast the direct model will spread in China.
Suning has seen computer sales volume double since 2007 to over 5 billion yuan last year, nearly 10 percent of its total revenue. It is set to post computer sales of 7 billion yuan this year.
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