Best Buy plans to open its first Best Buy-branded store on four floors of the Jiangshan Building in the Xujiahui commercial area of Shanghai.
"China represents an exciting market for Best Buy," said Al Lenzmeier, Best Buy's Vice Chairman. "With our first flagship store in Shanghai, we hope to enter the market in a way that enables us to learn about China's diverse consumers. Local business leaders, with keen customer insights, will be hired to manage the store. We believe that this venture will become an important part of our strategy to develop controlled growth opportunities internationally."
"Best Buy is one of the world's foremost consumer electronics retailers. We are delighted that Best Buy has chosen Xu Jia Hui as the site of their first flagship store in China. We warmly welcome their investment decision and are very honored to be working with them," said Sun Feizhong, Vice Governor of Xuhui District, Shanghai. "We think that the store will add diversity and options for electrical products and service to the residents of Shanghai."
Consumer electronics sales in China are projected to be nearly US$85 billion in 2006 and are projected to grow in the double digits for the next decade. Best Buy already operates three sourcing offices in Shanghai, Beijing and Shenzhen and has well-established relationships with manufacturers that are seeking to gain broader distribution in both China and North America.
"We view a greenfielding strategy (growing by opening new stores) as an opportunity for profitable growth in this market," said Weimin Lu, Chairman and General Manager of Best Buy China. "As Best Buy learns more about serving the Chinese consumer, we also expect to consider strategic investments of a manageable size in China."
Best Buy intends to purchase approximately 8,000 square meters in the Jiang Shan Building. Consistent with Best Buy's practices, the purchase price for this real estate was not disclosed.