Gome's main domestic rival, Suning Appliance Co, has been encouraged by falling rents and the expansion of a government subsidiary to farmers purchasing home appliances. Suning announced its plan to maintain the pace of its expansion by opening more than 200 new outlets in 70 cities this year, mainly third and fourth-tier cities in north China. Less-saturated rural areas would help to increase its market share.
The move also represented the Nanjing-based retailer's bid to venture into northern China, where Beijing-based Gome dominates.
"Suning aims to ride on the government's attempts to spur consumption and to maintain its growth," said Chairman Zhang Jindong.?
Suning has tried to improve its market share by creating a complete sales network with its flagship stores in large cities and central stores and community stores in rural markets.
Figures released by Gome and Suning showed total sales at Suning for the first half of last year slightly overtook Gome with 24.89 billion yuan (US$3.64 billion), compared with 24.88 billion yuan at Gome.
A year ago Gome was the No. 1 retailer with total sales of 21.16 billion yuan for the first half against 17.89 billion yuan at Suning.
"Profits for Suning could reach 3.7 billion yuan this year, a growth of 42.2 percent," Shenyin Wanguo Research and Consulting Co wrote in a note.
(Shanghai Daily January 19, 2009)