Suning Appliance (002024.SZ) has completed its US$28 million acquisition of Citicall Retail Management and its 22 Hong Kong stores from McAllen Retail Capital. The buyout allows Suning to expand its footprint beyond the mainland and use Citicall’s expertise to improve marketing strategies, according to company president Sun Weimin.
Suning, which currently has 885 stores throughout China, plans to 200 retail outlets in small cities and another 100 shops in rural towns this year. The domestic appliance and consumer electronics retailer wants to take advantage of government support for the sector manifested in discounts on white goods – particularly for rural consumers – and trade-in schemes. Beijing recently announced plans to expand the trade-in program beyond the nine provinces currently taking part on a trial basis.
Suning’s principal rival, Gome Electrical Appliances (00493.HK), will also benefit from these favorable policies. The company reported that sales in 2009 sales were unchanged from a year ago despite the closure of some 300 stores. While Gome has said in the past that it has no plans to expand beyond the domestic market, Suning’s move for Citicall may put the company under pressur to reassess its strategy.