Friday, March 04, 2011

Best Buy's failure in China - Shaun Rein

Best Buy ShanghaiImage by Fantake via Flickr
Even though Chinese consumers are spending more on expensive products like Apple, they shunned the Best Buy stories, explains Shaun Rein in CNBC. The economy of scale did not pay off:
According to our research, Best Buy in China was perceived as being too expensive, with many of their products priced higher than in local markets. Why buy a Sony DVD player or Nokia phone at Best Buy when you can pay less for the exact same product at a local store? Consumers will only be willing to pay more, like at the Apple stores, if they are buying something they cannot get elsewhere.
While scales of economy have allowed big chain stores in America to offer cheaper prices than niche players, local retailers in China are able to undercut prices because they pay less in salaries, benefits, rent and electricity. Rampant piracy in China also means local computers shops are willing to install counterfeit software in products, which makes it more appealing for customers.
More in CNBC

Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.
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