The decision by Best Buy to withdraw from the China market is not a real surprise, and illustrates that successful brands elsewhere cannot assume they can conquer the China market too, says Shanghai-based retail analyst Ben Cavender in the China Daily.
The China Daily:
Ben Cavender, principal of the Shanghai-based China Market Research, said Best Buy has been struggling in China since the time they entered the market.
In China, Best Buy has not been able to achieve the same kind of brand awareness and consumer recognition it enjoys in the United States, said Cavender. The cost of being a brick-and-mortar store is very high in China, not to mention the fierce competition with local home appliance retailers like Suning Commerce Group Co, Gome Electrical Appliances Holding Ltd and rising e-commerce giant JD.com, he said.
“It makes sense for them to exit the market as it would have proved expensive for the retailer to develop the market on its own,” he said.
Cavender said Best Buy’s main selling point in the United States－the store warranty－was not working in China where consumers are only familiar with the manufacturer warranty and are still price sensitive.
Suning, Gome and JD.com have already developed close connections with local manufacturers and customers. Best Buy, on the other hand, was often considered an outsider in the local market, said Cavender.
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