Gome Electrical Appliances Holdings Ltd., one of China's largest appliance retailers, may spend as much as 250 million yuan (approx. U.S. $30 million) to double stores in China this year.
Gome, which operates 144 outlets in China, plans to add 130 stores this year, according to Chairman Wong Kwong Yu. The Hong Kong-listed company will focus on expanding in Beijing, the northern Chinese city of Tianjin, and the southern border city of Shenzhen, as it will target 600 cities with populations of at least 500,000, Mr. Wong said.
"We are witnessing strong growth momentum in China's retail market,'' Mr. Wong said. "We want to tap that growth with our expansion."
China's retail sales rose 13.6 percent in January and February. Sales are expected to increase 13 percent to more than 6 trillion yuan this year after reaching a record 5.4 trillion yuan in 2004, according to China's statistics bureau.
Gome will tap its own funds for expansion, said Zhou Yafei, CFO. The company had HK $1.57 billion (approx. $201 million) in cash at the end of last year. "At more 5 percent per annum, bank loans are expensive by our standards," Mr. Zhou said. "And we have no need for them." (Bloomberg)
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