Gome seals China Paradise takeover deal
By Wang Xu (China Daily)
Updated: 2006-07-26 08:36
China Paradise signed a co-operation agreement with Beijing-based Dazhong
Group, which allowed it to acquire 78 per cent of the latter within a
year.
Dazhong, which owns 73 outlets in the nation's capital city, has a
hold on more than 60 per cent of the local market.
A Dazhong statement
last night said that it will reconsider its co-operation agreement with China
Paradise in light of the Gome-China Paradise merger, and it is willing to seek
"possible tie-up" with relevant counterparts "at an appropriate
time."
China's home appliance retailers have been expanding in recent
years to achieve scale and squeeze better deals from manufacturers.
Gome, which held about 6 per cent of the market in March, was planning
to open 120 to 150 new stores in 2006.
In comparison, Suning, the
sector's second-largest player, is now on the way to opening 1,500 stores in 350
cities by 2010.
However, the explosion of the sector has created
overcrowding as increasingly fierce competition squeezes the profit margin for
retailers.
According to Gome's first-quarter fiscal report, its net
profit grew 21.7 per cent, lagging far behind the growth of its sales income,
which soared 67.8 per cent in the same period.
(For more biz stories, please visit Industry Updates)
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