Home appliance chains Suning and Dazhong yesterday denied media
reports about a 3-billion-yuan acquisition deal between the
two.
Suning Appliance Co Ltd yesterday applied for a temporary halt
in trading on the Shenzhen Stock Exchange over concern that the
reports may influence its stock price.
A spokesman from Dazhong Electronics said the company doesn't
have any intention of being acquired.
The rumor came on the back of several acquisitions by major
electronics retailers last year. Best Buy, the biggest consumer
electronics retailer in the United States, bought control of
China's fourth-largest electronics retailer Jiangsu Five Star
Appliance. And the largest domestic retailer Gome purchased its
rival China Paradise.
Suning, after Gome, is the second-largest home appliance
retailer with a sales volume of 60.9 billion yuan and 520 stores.
Dazhong is 25th, with 8.7 billion yuan in sales and 97 stores,
according to a list released by the Ministry of Commerce.
Reports of the 3-billion-yuan deal came after Dazhong closed its
stores in Chongqing, Nanning and Taiyuan. These local stores were
later taken over by Suning.
But Dazhong staff said the closures were part of the company's
strategy to focus on the North China market and concentrate on
development.
"The 'takeovers' were only to do with the real estate of these
stores and the transfer of leasing rights. Apart from that there is
no further cooperation between Dazhong and Suning," said Luo Lian,
a spokesman for Dazhong.
A Suning staff member said the company doesn't have any
acquisition plans.
"Suning has been developing by expanding," said the Suning
employee, who did not wish to be named. "There could be some
cooperation with other companies, but we won't expand through
acquisitions."
Competition has been fierce in China's retail market, which is
expected to triple to 20 trillion yuan by 2020. Both domestic and
foreign retailers have been trying to gain market share through
consolidation.
After purchasing Jiangsu Five Star Appliance, Best Buy plans to
open up to 26 stores in the country over the next year, it said in
February.
A strategic partnership between Paradise and Dazhong was also
broken after Gome bought China Paradise for US$675 million last
year as part of consolidation in a market with more than 30,000
appliance retailers.
Dazhong is now reportedly in search of a new buyer. Luo from
Dazhong said the company has good contacts with domestic players
such as Gome and Suning. "But Dazhong hasn't reached any agreement
with any company at this stage," said Luo.
(China Daily April 10, 2007)