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Directory Of Year 2007, Issue 52
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Current Location:English » 200752 » PEOPLE & POINTS
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PEOPLE & POINTS

Year:2007 Issue:52

Column: PEOPLE & POINTS

Author:

Release Date:2007-12-27

Page: 3

Full Text:  

Top Retailer Expands Dominance

"Big is beautiful." Retail mogul Huang Guangyu (Wong Kwong-yu), founder of China's largest household appliance chain, seems to be a believer in this. And it has once again been proved, when Huang's Gome Electrical Appliances Holdings Ltd. announced that it was financing an acquisition of rival Dazhong Electronics Ltd., a move to consolidate its leading position in China's household appliance sales market.

"Big is beautiful." Retail mogul Huang Guangyu (Wong Kwong-yu), founder of China's largest household appliance chain, seems to be a believer in this. And it has once again been proved, when Huang's Gome Electrical Appliances Holdings Ltd. announced that it was financing an acquisition of rival Dazhong Electronics Ltd., a move to consolidate its leading position in China's household appliance sales market.

"Gome would loan 3.6 billion yuan ($488 million) to its strategic partner Beijing Zhan Sheng Investment Co. to complete the purchase and then manage Dazhong," the company said on December 16, adding that it could buy the Beijing-based retailer later for a minimum of 3.65 billion yuan ($4.95 million).

The expected merger with Dazhong, which has more than 50 percent market share in Beijing, will increase the number of Gome's outlets nationwide to about 1,100, almost double its closest rival Suning Appliance Co.'s 600. Before Gome's offer, Suning scrapped its 3-billion-yuan ($405-million) bid for Dazhong on December 12.

Huang, a typical rags-to-riches legend, was born in a peasant family in Shantou, Guangdong Province. In 1986, the young school dropout moved to Beijing with his elder brother, and launched Gome retail business by repairing and selling electronic products. The 38-year-old, who oversees Gome and owns unlisted Pengrun Investment Group, topped this year's Hurun Cashout Rich List by cashing out investment assets totaling 9.3 billion yuan ($1.25 billion). The list was initiated in 1999 by Rupert Hoogerwerf, a Shanghai-based researcher.

Huang's ambition has been growing since his successful acquisition of China Paradise Electronics Retail Ltd., then third largest consumer electronics retailer in China, for more than $675 million, at the end of 2006. Later in the first half of 2007, Huang, together with Bear Stearns, one of the leading investment banks on Wall Street, established a $500-million investment fund to finance further expansion.

The future test for Huang is likely to prove tougher as economically stronger overseas retailing giants are increasing their presence in China. But Huang still sees small stalls on street corners as Gome's key competitor. "Our market has traditionally been highly fragmented," he noted.

"On the other side of the world, nearly half a century ago, Sam Walton pioneered the Wal-Mart chain to give American people what they wanted: consistent low prices. Huang aims to do the same."

Rupert Hoogerwerf, calling Huang China's Sam Walton in a profile story, after an exclusive interview with Huang


"When the foreign players start making their presence felt, we will be ready to take them on."

Huang Guangyu, pledging to make Gome a competitive player in the global retail market


"The amount is not important for China. It's still a poor country. What's important is that they joined the policy discussion where we talk about things like debt sustainability, about coordination on the ground, about working better together among donors."

World Bank Vice President Philippe Le Houerou, welcoming China's recent announcement that it would contribute for the first time to the International Development Association, a unit of the World Bank that provides grants and no-interest loans to the world's poorest countries


"Please set your minds at rest, we Chinese always keep our promise."

Minister Cai Wu of the State Council Information Office, promising to grant overseas media organizations more freedom to report in China in the run-up to, and during, the Olympic Games in 2008, when he spoke to a reception for foreign journalists on December 18


"There were no clashes."

Office of Iraq's Kurdish regional President Massud Barzani, in a statement after Turkish troops crossed into north Iraq on December 18 in the first ground incursion against Kurdish rebels


"It was inevitable, in my view, and that is why I imposed it."

Pakistani President Pervez Musharraf, saying on December 15 that his six-week emergency rule had saved Pakistan from a serious threat of militant violence, as he addressed the nation just hours after repealing it


"We have achieved more than we could have expected previously, but it is less than what is needed to meet the urgency of the problem."

German Environment Minister Sigmar Gabriel, after world climate negotiators set a 2009 deadline for a landmark treaty to fight global warming at the UN-sponsored climate change conference in Indonesia


"I don't mean to scare anyone but this isn't a scare story."

Russian army Chief of Staff Yury Baluyevksy, warning on December 15 that the launch of an interceptor missile by the United States could trigger a Russian missile strike because it could be mistaken for a ballistic missile aimed at Russia

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