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Consumer goods: Suning's expansion strategy

By Diao Ying (China Daily)
Updated: 2008-08-11 10:12

With over 700 chain stores in China, Suning Appliance is famous for its speed in opening new stores. During its peak period in 2003 it would open a 5,000 sq m store weekly.

"We were opening new stores even in our dreams," says one of Suning's employees.

However, in a recent interview, Sun Weimin, president of the company, said: "We have never thought that our development was too fast. Actually, we always criticize ourselves for being too slow. "

The fast expansion has led many people to doubt whether Suning's capability can meet the quick pace of its development, and if the pressure results in many employees leaving the company. But there is at least one advantage: it established a nationwide network for Suning early in the home appliance game, giving it a better position as the competition became more intense.

As a result, Suning and its chief rival Gome are the only home appliance retailers that are doing business throughout China.

The early expansion also put them in a better position when competing with foreign retailers drawn by China's rapidly developing retail market.

Unlike the supermarket sector, in which Wal-Mart's and Carrefour's sales surpass the domestic players, in the home appliance game, Suning and Gome remain China's largest home appliance retailers.

Sun said that the foreign brands specializing in home appliances aren't doing very well in China. "And that is not because they are not capable, it is because the domestic competitors are too strong," he said.

In addition, the fierce competition has led to business models unique to China. Sun said when foreign competitors entered China's mature home appliance retail market, they aren't used to the models and tend to be frustrated. "It's like playing sports. I'm not a good baseball player, but if we play table tennis, I will definitely win," said Sun.

Sun says Suning emphasized fast growth from 2003 to 2005. But since 2006, "we don't emphasize speed anymore". Despite that, the company still opens about 200 stores a year and currently has 700 throughout the nation. The goal for Suning now is to open 1,200 stores in the 400 major cities across China.