Best Buy Exiting China Retail Market4 Dec, 2014 By: Erik Gruenwedel
Consumer electronics giant selling operations to focus on North America, including e-commerce
While much of Best Buy Co.’s branded consumer electronics may be manufactured in China, that apparently hasn’t translated into retail sales in the world’s most capitalistic communist country.
Minneapolis-based Best Buy Dec. 4 announced it is selling its Five Star business to a China-based real estate firm for an undisclosed amount. The sale does not affect Best Buy’s private label operations in China, which include televisions, sound bars and Blu-ray Disc players.
The transaction, which is subject to regulatory approval, is expected to close in the first quarter of fiscal 2016. The sale of Five Star is not expected to have a material impact on the results of operations, financial position or cash flow of Best Buy.
“We will continue to invest in and grow our China-based private label operations, with brand names that include Dynex, Insignia, Modal, Platinum and Rocketfish,” Best Buy CEO Hubert Joly said in a statement announcing the transaction. “The sale of Five Star does not suggest any similar action in Canada or Mexico. Instead, it allows us to focus even more on our North American business."
Best Buy entered the Chinese retail market in 2006 by purchasing a majority interest in Jiangsu Five Star and now operates 184 stores in China, all under the Five Star brand.
Best Buy exited Europe in 2013 when it sold its 50% stake in Carphone Warehouse Group for a reported $775 million.
Best Buy’s downsizing mirrors similar moves by Walmart, which on Thanksgiving announced it would cut staff, including management, in its Chinese operations. The world’s largest retailer, which has operated in China for 18 years, is facing increased competition and regulatory pressure within the country.