Foxconn aims to spark electronics sales war
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Leading European electronics retailer Media-Saturn and Foxconn Technology Group, the world's largest contract manufacturer of electronics, on Wednesday fired the opening shots of the latest battle in the mainland's highly competitive electronics retail market.
The two, who are aiming to shatter the dominance of local giants Suning and Gome, opened their first outlet in the mainland on Shanghai's iconic Huaihai Road.
The store, Media Markt China, is a joint venture, with Metro Group and Media Markt's two founding families, the Kellerhals and the Stiefels, holding 75 percent of the shares, and Foxconn Technology Group holding the remaining 25 percent stake.
Jiang Peifeng, a consumer electronics industry researcher from Digital China (Beijing) Brand Communication Institute, said that the opening of the Shanghai store showed that the two giants' were testing the waters before making a massive foray into the mainland market.
"Both of the companies are industry leaders, but the mainland electronics retail market is new to both of them," said Jiang.
Seeing thinner profit margins from outsourcing manufacturing, Foxconn has been on the lookout recently for opportunities to develop its own brand and to open its own retail outlets.
In March, Terry Gou, president of Taiwan-based Foxconn, announced an ambitious plan to open 1,000 electronics retail stores in three years, but, in the meantime, no concrete developments had taken place, Jiang said.
Media-Saturn Chief Executive Officer Roland Weise said the joint venture will open 10 stores in Shanghai over the next two years.
After that, the partnership will "ramp up its presence" on the mainland by opening more than 100 outlets throughout the country, he said.
But Weise is aware of the fierce competition in a market currently dominated by local players Suning and Gome.
"As a leading innovator in the market for consumer and home electronics and working with a strong partner like Foxconn, we are in the best possible position to pursue our growth strategy - which has already proved successful in Europe - in Asia to tap this huge growth potential," Weise said.
China's retail electronics market, growing at an annual rate of 8 percent, is expected to have a total volume of 150 billion euros ($203 billion) in 2013, and the Shanghai market alone will exceed 5.5 billion euros, according to Media Markt.
Louis Woo, head of the channel business group of Foxconn, said that Media-Saturn's track record in Europe clearly demonstrates that it is capable of becoming a regional market leader within a short period of time.
"As a Media Markt China shareholder, we will be working with Media-Saturn to successfully serve this market that we know so well.
"This cooperation between the world's leading electronics manufacturer and one of the world's leading electrical goods retail companies offers countless other opportunities which we will be seeking to develop for the benefit of consumers in China and all of our shareholders," Woo said.
The first Media Markt store on Huaihai Road of Shanghai has a sales area of 9,500 square meters and offers more than 45,000 products.
