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The Plot Thickens

rez | Posted in Business on December 5, 2007 08:16am

Home Depot at Home in China for Holidays

Source: USA TODAY
Publication date: December 4, 2007

By Calum MacLeod

BEIJING — An American tradition came to China on Monday when Home Depot lit up a giant Christmas tree in the parking lot of its new Beijing mall.

Customers in the Chinese capital are lighting up executives’ eyes, too. Since opening in China in August, the return on investment is amazing, said Annette Verschuren, president of Home Depot Asia and Canada.

After decades of state-allocated housing, the dramatic recent rise in home ownership in China has opened the door to foreign companies such as Home Depot, the world’s No.1 home-improvement retailer, and Great Britain’s B&Q, which had a head start on its U.S. rival.

The world’s most populous marketplace is a big opportunity, Verschuren said. “Twenty years ago, Chinese people didn’t own their homes. Now we want to sell the whole (design) solution to the customer, typically a new homeowner faced with a bare concrete shell of 800 square feet. We are exceeding expectations in terms of operations,”

After a decade of courting various Chinese companies, Home Depot finally bought its way in with the December 2006 purchase of Home Way, a Tianjin-based retailer which modeled itself on the Atlanta-based company. “They called themselves Home Way as they wanted Home Depot to do a deal with them, even 11 years ago,” when the company was founded, Verschuren said.

The imitation extended to the same orange work aprons worn by Home Depot staff.

In China’s still-developing market, everything is copied very fast, said Yves Chen, president of Home Depot China, who learned his trade with French firm Carrefour, one of the most successful foreign retailers in China. “But if … you keep innovating, you will stay ahead,” he said.

Innovation in China, according to Verschuren, includes having the imagination to light a giant Christmas tree and introduce eco-options, such as products for air and water quality equipment.

“We are more comfortable buying small and growing big,” she said, comparing the company’s China strategy to its Canadian and Mexican operations, which grew from even smaller acquisitions. But she admits it was pretty rough before the company invested millions to remodel the original 12 stores it bought from Home Way, train the 3,000 employees and start operating under its own brand in August.

Home Way needed to strengthen its offerings in a number of ways, including its assortment of products, the kitchen, bathroom and flooring sections. And the store exteriors had to be redone. The remodeling was completed without shutting the stores.

On Monday, customer Qian Ke and his wife browsed the aisles, including Christmas trees and decorations, at the Fenzhongsi flagship store where they had shopped in its earlier incarnation.

“There doesn’t seem to be a big change from when it was Home Way, but the layout seems better, and there is more variety of products,” said Qian, 53, a research scientist. He says he spent $20,000 redecorating their apartment three years ago. “I know I redecorated too early, as the prices have fallen because competition is so fierce now.”

Tighter pricing is part of the Home Depot strategy, Verschuren said. “We have been getting closer to the market and customer,” and realizing how different the customers are in each of the six northern and central cities where Home Depot currently operates, she said.

Plenty of education and promotion remains to be done.

“Lighting Christmas trees is a great tradition in North America. We’re delighted to continue this tradition in China,” Verschuren told a crowd of American businessmen in the parking lot, and a larger crowd of bemused onlookers.

“I have no idea what that tree is doing here. What’s Christmas?” asked migrant laborer Yang Kunji.
 
 
 
http://www.toolsofthetrade.net/industry-news.asp?articleID=619962&sectionID=1519<!—->

<!—->

 


Edited 12/5/2007 12:17 am ET by rez

Reply

Replies

  1. jesse | Dec 05, 2007 09:06am | #1

    Want your kids to be successful? Make them learn Mandarin.

  2. calvin | Dec 05, 2007 02:29pm | #2

    Little or no shipping charges on the hardware and tools.

    A Great Place for Information, Comraderie, and a Sucker Punch.

    Remodeling Contractor just outside the Glass City.

    http://www.quittintime.com/

     

  3. FastEddie | Dec 05, 2007 04:03pm | #3

    Chinese McMansion: 1,200 sf with 1-1/2 bath and a carport.

    "Put your creed in your deed."   Emerson

    "When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it."  T. Roosevelt

  4. User avater
    maddog3 | Dec 05, 2007 04:20pm | #4

    there goes the price of 2X4s and everything else

    .

    .

    .

    .

    , wer ist jetzt der Idiot ?

  5. byhammerandhand | Dec 06, 2007 12:34am | #5

    So, this begs the question. Is the parking lot full of undocumented aliens who will work for cash and give you an inflated invoice for insurance claims?

  6. drozer | Dec 06, 2007 02:34am | #6

    "...president of Home Depot Asia and Canada."

     

    what's up with that?

    1. rez | Dec 06, 2007 03:30am | #7

      Annette says it's a dirty job but somebody has to do it. 

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