Home Depot’s Ongoing China Woes

Friday, December 5, 2008 22:02
Posted in category Uncategorized

for those of you who were following me early one, you might remember that I had a few posts on Home Depot in China.

They have in many ways been the Little engine That Could… they kept trying.. and trying … and trying.

The problem was that their retail strategy in the early days was trumped by the UK based Kingfischer group.  Greenfield options were few, and THD’s due diligence provided more than once to be so extensive that the target was acquired midstream.

Needless to say, a few management team swaps took place prior to their first acquisition, and unfortunately it looks like that team, lead by the experienced Chen Yaoding, is now out as well.

B&Q, and many others, will attest to the difficulty of this market, and with the global downturn in housing I can only imagine what the impacts have been on this sector in China.

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2 Responses to “Home Depot’s Ongoing China Woes”

  1. EvdB says:

    December 6th, 2008 at 6:02 pm

    Indeed, the challenges of Home Depot and alike is only made worse by world economic downturn. Parent company more eager to cut investments and at some stage also the China p&l needs to suffer. I believe the hole concept of DIY does not work in this market. Consumers tends to use work men for all sort of things around the house and they make hardly any money from labor. So their way to make money is by profits (although small) on sourcing the materials. People might get the ideas from B&Q and Home Depot, the actual materials are sourced differently. Unless those retailer change strategy, they will not be succesfull.

  2. Rich says:

    December 8th, 2008 at 10:09 am

    EvdB.

    We oversee some construction tool assembly, and the markets have dropped off significantly. B&Q/ THD are surely suffering, but I think their recovery will come before the rest of the market as people will work on their houses before buying new ones.

    Where I think this gets interesting is that B&Q has a HUGE sourcing team, while others are still using old agent channels. I expect a lot of those arrangements are now under review as part of a cost savings measure.

    R