The mainland's two biggest consumer electronics retailers are spending billions of yuan to buy store properties to make sure they can continue operations in prime locations amid rising rents.
Gome Electrical Appliances Holding, the mainland's biggest electronics retailer with 654 stores, has purchased 20 recently to limit the impact of rising rents, according to president Chen Xiao. Each store cost 'between tens of million yuan and 100 million yuan', Mr Chen said.
Gome, controlled by the mainland's richest man Wong Kwong-yu, will continue to buy store properties when opportunities arise, according to Mr Chen.
Suning Appliance, Gome's closest rival, is raising at least 2.4 billion yuan through a share placement to fund the opening of 250 new stores and the purchase of store properties, including its flagship store in Shanghai's Pudong district, according to president Sun Weimin.
Shares of Shenzhen-listed Suning, which were suspended from trading last Monday, jumped 10 per cent on Tuesday on news that it had obtained regulatory approval to raise funds through a private share placement.
The retailer needed to buy, for the first time, store properties because some landlords refused to rent out the desired locations, Mr Sun said. He did not indicate how many stores would be purchased.
Mr Sun said the exact fundraising needs had yet to be determined.
