China's Suning's Similarities Outweigh Differences From U.S. Counterparts

QINGDAO, CHINA — In a city that many Americans probably have never heard of, with a population of 7.5 million or so, it isn't much of a surprise to find an electronics/appliance chain that had $9 billion in sales last year.

The city is Qingdao, home of this month's SinoCES trade show as well as one of the host cities for the 2008 Summer Olympics starting next month. The retail chain is Suning Appliance, which has 700 locations in more than 200 cities in China, one of which is located here. (The $9 billion sales figure is based on an estimate from the China Chain Store & Franchise Association and is converted from local currency.)

The Consumer Electronics Association delegation to SinoCES visited the local Suning outlet during a tour of local retailers on the eve of the opening of the show, and it was eye-opening how so many things are the same yet others are so different in electronics/appliance retailing on either side of the Pacific.

Suning, founded in 1990, is a "3C" store, meaning it sells consumer appliances, computers and communication products. It sells all of that and a lot more.

Asked about this store's sales mix by product category, store manager Dong Huazhi said 30 percent is TV, while cellphones, washing machines and refrigerators represent 15 percent each and room air conditioners and PCs comprise roughly 12 percent each. The balance of sales is in digital cameras and assorted handheld items, he said.

The weather here is foggy, muggy and hot, and when asked through an interpreter how sales for ACs were this summer and if they helped the bottom line, she smiled just like any store manager in the United States would with such good news and said, "There have been very good air conditioner sales this summer. Profits have been good."

Touring the store's first floor, one is greeted with handheld items — laptops, MP3 players, digital cameras and camcorders.

On the second and third floors, departments were broken up by brand and product category, but appliances, CE and housewares had representative products on each level.

Among the brands featured were many names familiar to U.S. consumers — Sharp, Samsung, LG, Sony, Nikon, Sanyo and Toshiba — along with Chinese brands that are big players here and are trying reach the same level of success in the United States, including Haier and Hisense. Siemens cordless phones were on display along with those of another local CE supplier, Changhong.

Pricing was higher than in the United States for select items. A 46-inch Hisense 1080p plasma TV was slightly more than $1,700, while a Haier 42-inch LCD was just over $1,800, and a 70-inch 1080p Samsung LCD was just around $6,000. (All the prices are approximate given the gyrations of exchange rates.)

While this was the exact opposite of a "mystery shopper" visit, employees were attentive and matched what Suning pledged in printed information provided to its visitors that "Suning's promise [is] service."