Suning uses HK deal in bid to go global
By Pan Xiaoyi |
December 31, 2009, Thursday
|
Print Edition
Print Edition
SUNING Appliance Co yesterday announced it has acquired one of the top three electrical appliance retailers in Hong Kong as it seeks to expand its presence outside the Chinese mainland and use Hong Kong as a platform for its global expansion.
The Nanjing-based company has agreed to buy Citicall Retail Management for HK$35 million (US$4.4 million) and the deal is expected to be completed by March, said Sun Weimin, Suning's president. The company will spend another HK$180 million for Citicall's inventories and fixed assets.
The latest venture into Hong Kong comes after it spent 57.3 million yuan (US$8.4 million) for a controlling stake of 27.36 percent in Japan's Laox in June.
"As a trendsetting market, Hong Kong could help the mainland market to improve product portfolio and operations," said Sun. "And with Hong Kong's rich experience in international rules, laws, talents and systems, Suning could gain necessary knowledge to prepare for its expansion overseas."
Citicall, established in 1976, operates 22 stores across Hong Kong and is one of the three largest electrical retailers there alongside Li Ka-shing-backed Fortress and Broadway. Citicall had sales of HK$1.3 billion in 2008.
Suning plans to add 30 stores within three years to grab more than 25 percent of Hong Kong's electrical retail market.
"Suning would integrate the supply chains, product mix and after-sales service with the Hong Kong partner. It will also help domestic home appliance makers to penetrate the market," said Sun.
Suning's rival Gome Electrical Appliances entered Hong Kong in 2003 and operates about 10 stores.
Suning made a profit of 1.97 billion yuan in the first three quarters, beating Gome's 965 million yuan.
The Nanjing-based company has agreed to buy Citicall Retail Management for HK$35 million (US$4.4 million) and the deal is expected to be completed by March, said Sun Weimin, Suning's president. The company will spend another HK$180 million for Citicall's inventories and fixed assets.
The latest venture into Hong Kong comes after it spent 57.3 million yuan (US$8.4 million) for a controlling stake of 27.36 percent in Japan's Laox in June.
"As a trendsetting market, Hong Kong could help the mainland market to improve product portfolio and operations," said Sun. "And with Hong Kong's rich experience in international rules, laws, talents and systems, Suning could gain necessary knowledge to prepare for its expansion overseas."
Citicall, established in 1976, operates 22 stores across Hong Kong and is one of the three largest electrical retailers there alongside Li Ka-shing-backed Fortress and Broadway. Citicall had sales of HK$1.3 billion in 2008.
Suning plans to add 30 stores within three years to grab more than 25 percent of Hong Kong's electrical retail market.
"Suning would integrate the supply chains, product mix and after-sales service with the Hong Kong partner. It will also help domestic home appliance makers to penetrate the market," said Sun.
Suning's rival Gome Electrical Appliances entered Hong Kong in 2003 and operates about 10 stores.
Suning made a profit of 1.97 billion yuan in the first three quarters, beating Gome's 965 million yuan.
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