Learning about global marketing and specific global entry strategies these days in class have reminded me of one thing I saw this summer when I went back to Nanjing, my hometown in China. When I was shopping in the city center, I came across a familiar logo of Best Buy, beside the logo of a local electronic retailer called the Five Star Appliance.

Five Star was founded in 1998, now being the fourth-largest appliance and consumer electronics retailer in China with its headquarter in Nanjing, Jiangsu. Whereas, I only got to know about Best Buy after I came to Canada, that Best Buy is a leading American multinational consumer electronics corporation. I was quite curious about what is happening between these two companies, so I did some research.

Best Buy has actually been in the Chinese market for a while since it acquired a majority stake in Jiangsu Five Star Appliance Co. in 2006. Regarding the global entry strategy, Best Buy had established a joint venture with this local Chinese company which offers them with local network, already established brand name and good understanding of the market. And later, Best Buy bought out the whole company.

However, Best Buy seems to struggle with gaining market shares and competing with its rivals. According to Euromonitor International, in 2012, Best Buy only had 1.8 percent of the Chinese market, while local rivals Suning and Gome had 10.6 percent and 10.3 percent respectively. The two large local competitors have almost formed an oligopoly situation in many cities in China, they have well-developed brands and strong bargaining power over suppliers. This absolutely restricts the growth potential of Best Buy in China.

Also, Best Buy has to adjust its strategy to fit into a different cultural and consumer behavior. Chinese consumers are mostly price-sensitive, they like to bargain for a better deal. They also favor a great amount of options to choose from and some strong local brands. It is essential for Best Buy to develop a better understanding of its target consumers in China so that it can seek opportunities to grow and compete with domestic firms.