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Suning continues expansion in traditional, online commerce

Updated: 2011-03-01 07:29

(China Daily)

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Suning continues expansion in traditional, online commerce 

By the end of 2010, Suning Appliance Co Ltd had four logistics bases in operation, with 10 under construction and agreements had been signed to begin building another 17. Zhou Dongchao / for China Daily

 

BEIJING - Suning Appliance Co Ltd, China's biggest home appliance retailer by market value, achieved a net profit of 4 billion yuan ($609 million) in 2010 and will step up its expansion in both traditional and online commerce.

According to its filing statement to the Shenzhen Stock Exchange, Suning's annual operating revenue totaled 75.5 billion yuan, rising 29.5 percent year-on-year, and its net profit increased 38.8 percent to 4 billion yuan.

"Our strength and efforts contributed to the performance," Sun Weimin, vice-chairman of the Suning board, told China Daily.

By the end of 2010, the company had total assets worth 43.9 billion yuan, and had opened 408 outlets, 404 in China and four in Japan. Sun said the company will open 370 new stores this year, reaching a total of 1,700 outlets.

"While we add stores, we're still paying attention to our online business," Sun said. "Traditional and e-commerce have different customers, and we believe the two can develop cooperatively."

According to the statement, four logistics bases were in operation by the end of 2010, with 10 under construction and agreements were signed to begin building another 17.

"We have completed our logistics plan for e-commerce operations," Sun said.

Zhang Jindong, chairman of the board, said previously that the company would invest 12 billion yuan in building 60 logistics centers between 2013 and 2015. He added that logistics cost to total sales would decrease to 0.3 percent from 0.5 percent at that time.

Tang Jiarui, a retail analyst at Everbright Securities Co Ltd, said the logistics plan will help to promote Suning's sustainable development.

Tang said that if a company does not invest enough in its logistics, it may have good short-term performance, but it will be hard to achieve ambitious growth in the long run.

"If the 60 centers can be set up, Suning's online profit and premium valuation brought by high growth will greatly improve its investment value," said Tang.

Gome Electrical Appliance Holdings Ltd, Suning's largest competitor in China, said last month that it will open 400 stores this year, for a total of 1,800 stores.

In November, Gome announced its purchase of an 80 percent stake in the online shopping website coo8.com and carried out e-commerce and online marketing strategies.

Figures from the China E-commerce Research Center showed that online retail sales in the country doubled last year from 2009 to 513.1 billion yuan.

China Daily

(China Daily 03/01/2011 page16)

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