Business Model Innovation of Large Electric Appliances Chain Stores in China under Global Competition
Chen Haiqun, Kong Xiangke
Research Center of Modern Distribution, Jinan University
Abstract
With the deepening of Globalization, global retailers gradually find their way into China. Carrefour, Wal-Mart, IKEA, B&Q have already adopted their chain store management in China and challenging local competitors. However, in the market of electric appliance chain stores (EACS), we seldom find any trace of global retailers. The local EACS, with their rapid expansion all over China, have set up barrier for outside entrance. Through years of development, specialization and economy of scale have enabled EACS to adopt a low price strategy. Among them, GOME, SUNING are the most representative enterprises. In the end of 2007, Best Buy, the world’s biggest EACS, opened first chain store in Shanghai. The participation of global EACS brought new business model and posed challenge to EACS in China, the pattern of EACS in China may undergo a drastically change.
This paper analyzes the business innovation and sustainable development of the Electric Appliances Chain Stores (EACS) in China on a global background. The paper first sets up an analytical framework of growth and innovation, then uses GOME, the largest EACS in China, as an example to illustrate the growth and the resulting competitive advantage of EACS in China. The paper points out that EACS have achieved their growth by squeezing suppliers therefore such competitive advantage may not be sustainable in the long run. By comparison with the business model of global retailers, the paper suggests EACS in China need to adjust their profit model, to build strategic partnerships with manufacturers and focus their efforts on differentiating consumers’ needs and product functionality to achieve a win-win situation.
Keywords
Electric Appliances Chain Stores (EACS); Global Competition; Business Model Innovation; Sustainable Development
Foundation Item
This Research was sponsored by National planning office of philosophy and social science of China（Project code：05BJY077）and sponsored by SRF for ROCS, State Education Ministry of china（Project code：2005383）
