Best Buy China's strategic outlook remains unfocused

The appliance industry has just received support from the energy efficiency subsidy policy, and it came to the news that Best Buy will “drop down on the Chinese market”. Best Buy’s wholly-owned subsidiary in China Five Star recently confirmed that Five Star’s CEO Wang Jian has been appointed as the senior vice president of Best Buy Global. There is even more news that tomorrow, Best Buy will release a new China strategy. However, due to the fact that it is still dominated by physical stores, whether China's roots can save the deteriorating Best Buy suspects.

After Best Buy's acquisition of Five Star Electronics, Wang Jian was the only veteran of the five star electronics startup team. For this time appointed as the senior vice president of Best Buy Global, Five Star said "unique." This means that Best Buy will pay more attention to the Chinese market.

In fact, Best Buy’s recent news in the local market continues. In the case of market share declines, Best Buy first dismissed former CEO Brian Dunn, followed by his founder, Richard Schulz, who announced his resignation as chairman. Not only that, Best Buy's performance has also fallen significantly. In April this year, Best Buy announced a large-scale restructuring plan and will close approximately 50 stores in the United States to save costs.

As the home appliance retail giant of the United States, the predicament of Best Buy has a certain relationship with Wal-Mart and Amazon in the domestic market, especially Amazon, which is represented by online sales. It is in this context that Best Buy gives Chinese market executives the opportunity to “advance officialdom” and hopes that the Chinese market will bring a turning point to the company.

However, the Chinese market does not appear to be a blessing for Best Buy. Last year, Best Buy, which entered the Chinese market for five years, refused to accept all its own brand stores in China. All of its business in China was handed over to Nanjing Wuxing Electronics, which was acquired in 2009. Previously, Wang Jian had stated that Best Buy's own stores will reopen at the end of last year, but today, Best Buy has not yet realized this wish.

Moreover, from the home appliance industry that Best Buy engages in, the overall industry slumped in the first half of this year due to factors such as early release of consumer demand, increased store costs, and online shopping impact. The major home appliances giants of Gome and Suning have experienced different degrees of decline in their first quarter results. In this context, Best Buy, who had withdrawn from the Chinese market for less than a year, tried to overturn it. The outlook is not optimistic. More crucially, Best Buy’s wholly-owned subsidiary in China, Wuxing, is hard to compete with Suning and Gome in terms of network size and profitability.

The reporter also learned from relevant sources that Best Buy China's strategy is mainly based on physical stores, and has not learned the "lessons" in the local market, and it has not involved too much e-commerce. Best Buy in the Chinese market only sells its own brand of shadow ya and swordfish through online cooperation with third-party companies. The products mainly involve digital accessories and photographic equipment. The Tmall's swordfish flagship store, which is hosted by the new seven-day electrical network, is expected to be operational by the end of next month, and the cooperation period between the parties will reach three years. From this it can be seen that Best Buy has no plans to launch a stand-alone online platform in the near future.