The Asian Economist

Last Week, my Econ professor took our class of 8 people to Suning, China’s version of Best Buy. We were given a grand welcome and a grand tour of their main store in Nanjing. I have never had this kind of welcome before, there were about 10 people in suit welcoming us and clapping and saying “huang ying huang ying”. After the grand tour of the store we met up with one of the director of the company and were given a quick presentation about the company. We ended the day with Q&A.

What is Suning? Suning is China’s largest electronic superstore with chain stores all over China. Suning originated in Nanjing, in the early 1990’s as an air-conditioning supplier. It grew to sell computer, communication devices, and consumer appliance. They call this their 3C’s. Now it is 3C+ and plus if for their services, such as repair, delivery etc. Suning is very similar to Best Buy. Unlike Best Buy, Suning follows a more eastern philosophy of developing harmonious relationships not only with their suppliers but also their employees and the community. They have been able to grow with the support of the government and the community. They have received various awards in helping the community; for example, during the recent winter storm in China, Suning has sent both money and aid to those in need.

During their presentation, they presented us with graphs of their company’s growth both in terms of total revenue and the numbers of stores.

“Suning, one of the country’s leading home appliance retailers, said its 2006 profits jumped 105% in the last year thanks to booming sales of televisions, cell phones, and computers. Demand is so strong that the company opened 145 new stores in 2006!” (source)

The company is planning to open 200 more chain stores by the year 2010. According to the director, the location of the store is located by three criteria population, economics, and easily accessible areas, such as downtown shopping city. The Suning headquarter that we went to is located in the hottest shopping area in Nanjing, the Suning store is right across from Wal-Mart.

During the Q&A, the director was asked if the company will expanding internationally and the answer was a little surprising to many of the students. While most companies want to expand overseas, Suning wants to keep its concentration in China. The main reason is that the market in China has not yet matured. The rise in the number of middle class citizen in China is still growing; therefore the demand for the 3Cs will keep on rising. At the moment, Suning does not have a main competitor in China. There are thousands of small electronic shops in China but no real big store that can compete with Suning. Best Buy has opened a store in Shanghai but according to the director, he is not at all worry about competition because as he said before, the market in China has not yet matured yet. At the moment there are enough consumers for Suning, small electronics shops and the one Best Buy in Shanghai.

As China keeps on developing, the number of consumer who could afford computers, communication devices, and consumer appliances will continue to grow also. One of my questions for the director was “Who is Suning’s biggest competition” and the director smiled and responded simply “自己” (zi ji) meaning “itself”.