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B&Q to close another Chinese store

UK-based home improvement retailing company B&Q is planning to close its Hankou branch in Wuhan, capital of Central China's Hubei Province, the latest in a string of shutdowns as the company is struggling with more than six years in the red.

"B&Q regrets to announce that the operation of the B&Q Wuhan Hankou Store will be suspended starting February 9, 2013," said a B&Q statement e-mailed to the Global Times Wednesday, adding that B&Q will seek new properties to open a new store in Wuhan.

Store closings in China are not new to the subsidiary, owned by the UK's home improvement giant Kingfisher. In February 2012, the company closed a store in Nanjing, East China's Jiangsu Province.

B&Q entered China in 1999, but has been suffering huge losses in recent years, leading to closure of 22 stores between 2009 and 2010.

According to Kingfisher's financial report for the third quarter in 2012, although B&Q saw its sales grow 2.6 percent from a year before, its retail loss amounted to 3 million pounds ($4.8 million), and the company has recorded similar losses for more than six years.

"The reason a foreign home improvement brand like this one failed to run well in China is that it has not adapted well to the Chinese market," Wei Guangju, a consultant at Adfaith Management Consulting, told the Global Times Wednesday, noting that Chinese customers prefer to have home improvement done all at once by decoration teams, while foreign customers like to do home improvement by themselves.

Wei also noted that compared to Chinese home improvement retailers, which have access to cheaper products made in China, B&Q's global product suppliers do not offer it a pricing advantage in China.

B&Q is not the only home improvement store to struggle in the market. In September 2012, US home improvement company Home Depot closed its last superstore in the Chinese mainland, located in Zhengzhou, Central China's Henan Province, and announced a decision to quit the mainland market.

Wei said he is not optimistic about the future development of B&Q, especially since the country's booming online market gives consumers access to a variety of home improvement products without stepping out of their homes.

However, B&Q China CEO Jacques Hayaux Du Tilly wrote in the statement that the company "is here in China for the long term."

Of course, not all foreign companies have faced business difficulties in China.

Sweden-based retailing company Ikea has performed very well in China, as evidenced by the fact that the company continues to open new stores in the Chinese market.

"Ikea products are not expensive, and are very convenient when moving house. So many young Chinese consumers like the brand," Wei said, noting that Ikea services such as free coffee have gained it a good reputation among Chinese consumers.

Source : Fang Yunyu – Global Times

18 January 2013
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