Domestic

Gome's sporting goods chain takes a swing at a home run

By Bao Chang and Wang Sining (China Daily)
Updated: 2010-05-04 09:08

BEIJING - The prospects for a new sporting goods chain backed by Gome Electrical Appliances do not appear promising, despite ambitious plans to open 100 stores within three years, analysts said on Monday.

Gome's sporting goods chain takes a swing at a home run

A salesman adjusts a basketball display in a sporting goods shop in Beijing. China’s sporting goods market is becoming quite competitive amongst retailers while the scale of the market is increasing nearly 20 percent every year. [Yu Fu / For China Daily]

Beijing Gome-Rayspo Investment Co Ltd, founded by Huang Xiuhong, the younger sister of Huang Guangyu -formerly China's richest man and chairman of Gome Electrical Appliances - opened its first store last week in Beijing, targeting China's retail sporting goods market.

Huang Xiuhong, founder of Gome Rayspo, has big expansion plans. [File photo]

"Gome Rayspo is going to launch three new stores in Beijing this year and try to set up 100 stores in 20 cities around the country within three years," Li Yan, general manager of Gome Rayspo told China Daily via a phone interview on Monday.

Gome Rayspo and Gome Electrical Appliances are controlled by the same parent company, Pengrun Investment Corporation, in which Huang Xiuhong is chairwoman.

According to Li, "80 percent of Gome Rayspo shares are controlled by Huang Xiuhong and the remaining 20 percent is held by Beijing Gome Electrical Appliances Ltd."

With their previous business focus on home appliances an aggressive attempt by Gome to break into the sporting goods field has raised eyebrows in the industry.

"It's a far-fetched idea to conduct business in both electrical appliances and sporting goods. The only credentials Gome Rayspo has is the parent company's experience is in operating a chain of retails stores," an industry expert said, requesting anonymity.

Despite the potential risks of investing in a new industry, Li of Gome Rayspo said. "This is not a sudden decision as we have been planning to enter the sporting goods industry since 2007 and are optimistic about this market sector ever since the 2008 Olympics increased Chinese people's interest in different kinds of sports."

However, industry insiders doubt the Rayspo plan will work.

An executive from a competing sporting goods retailer, who declined to be named, said he wouldn't lose sleep over the development.

"Customers who buy Gome's electrical appliances may not be sports fans and therefore will not necessarily shop in Gome Rayspo."

Gome Rayspo has recruited employees from other sporting goods retailers and physical educational institutions who are familiar with the industry. Currently, only five of Gome Rayspo's staff are from Gome Electrical Appliances.

"China is becoming the battleground for many sporting goods retailers because the scale of China's market is increasing nearly 20 percent, every year," said Flora Bao, a senior editor from Global Sport Market magazine.