Can a Small Business Survive? (6)
There is a surprising but interesting news comes out this week: BestBuy announced that they close all the stores in China.
Here is the article: Best Buy Shuts China Stores to Focus on More Profitable Brand from bloomberg.com
I’ve been to Futureshop on the first day I arrived in Canada. At that time, I was surprised by the number of staff there. Sometimes I even couldn’t find anyone to help me check out. In China, staffs are everywhere, some may follow you to anywhere, it’s annoying sometimes, but you cannot deny that it’s convenient to reach the product you want. Later on, I thought maybe it’s because the labour cost in Canada is too expensive or, like what BestBuy said in China, they want to provide a comfortable, upscaled environment for people to choose whatever they want. People like the environment but also want more information of products and it’s hard for people to get used to the American style customer service quickly. Also, people like the quality of BestBuy but they prefer a good deal.
(A picture about how German (western) different from Chinese (eastern) in opinion and the way people think)
While Bestbuy is still doing business in their American way, Gome and Sunning are not leaving many market for it . First of all, to be able to sell products in the store, manufacturers have to pay Gome and Sunning million RMB for admission. Also, Gome and Sunning import and sell the products before they actually pay the manufacturers. This is their key to success. In this way, they can import a large amount of inventory with a high discount and therefore offer low price for customers. However, this is also a cruel way, and many small manufacturers bankrupted because the capital chain broke. Lastly, Gome and Sunning keep opening new stores, so the loss of one store can be covered by the gain from the other store. Some articles also mentioned that Gome and Sunning close stores for a nice book profit. All in all, Gome and Sunning are not simply making profit from prices spread.
A giant business can fail in an unfamiliar market when a small one survived
More interesting differences between German and Chinese, drawn by a Chinese who grew up in Germany:
