Saikyo Sakura Assets Says Gome Electrical Appliances Holding Aims For Chinese Online Market Monopoly

Saikyo Sakura Assets Says Gome Electrical Appliances Holding Aims For Chinese Online Market Monopoly
Saikyo Sakura Assets Says Gome Electrical Appliances Holding Aims For Chinese Online Market Monopoly

Saikyo Sakura Assets has noted that Gome Electrical Appliances Holding Ltd., China’s largest white-goods retailer by store numbers, said Wednesday it aims to become the country’s top online home-appliance seller in two to three years, with goods to be sold at discount prices.

Analysts from Saikyo Sakura Assets highlighted that Gome is aiming to account for 15% of the online market for home appliances in the next few years, with online sales comprising of no less than 10% of the store’s revenue, company President Wang Junzhou told a press conference.

Frank Hunter, Head of Corporate Derivatives at Saikyo Sakura Assets said ‘’Gome has set high targets which is admirable and very achievable looking at their track record and work ethics’’.

Gome (493) GMELF, +0.00% has reached agreements with multiple brands to sell their products at the lowest market prices, Han Pengde, an executive heading Gome’s online sales operation, said at a conference, Gome’s revenue last year exceeded 100 billion yuan ($15.4 billion), and the company is confident that it is in a more advantageous market position, said Wang.

“Currently, the largest online retailer of home appliances is 360buy.com, which booked 10.2 billion yuan in revenue in 2010.” Added Anthony Brown, Head of Wealth Management at Saikyo Sakura Assets.

Earlier this month, former Gome chairman Chen Xiao, who resigned in March to end a protracted power struggle with company founder Huang Guangyu, told 21st Century Business Herald that suppliers are charged excessively for selling their products in Gome outlets, a business model that drives up costs and is set be eliminated from market competition.

Gome’s old rival Suning Appliance Co. (002024) also said it would quadruple its e-commerce businesses to 8 billion yuan this year. However, in terms of online sales, both are still way behind 360buy.com, whose zero cost in running physical stores gives it a price edge and an impressive presence in major cities, where developed logistical networks are more prevalent.

360buy.com, which has attracted a significant amount of venture-capital funding, is set for a U.S listing in 2013, Chief Executive Liu Qiangdong told media earlier this month.

To view the original release of this article, please visit Nikkei Asian Review page here.
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