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Acquisition might drive up prices: survey
26/7/2006 17:36

Wendy Zhang/ Shanghai Daily news

Consumers are worried about the possible price hike for home appliances after Gome Electrical Appliances Holding Ltd acquired its rival, China Paradise Electronics Retail Ltd, according to a survey of 8,976 netizens from 22 Chinese cities.

Nearly 94 percent of the respondents are worried that Gome's market domination after the acquisition will drive up home appliance prices. China Paradise mainly targeted consumers in the eastern China region, especially those in Shanghai, with around 47 percent of interviewees in Shanghai regularly buying home appliances there.

Despite Gome's possible price increases, 68.4 percent of netizens said it was still their first choice store to buy home appliances, due to its good prices, quality and after-sale service.

Among the surveyed home appliance suppliers, 12.6 percent worry that Gome might raise its threshold for them to enter, as they will have fewer choices after the acquisition.

Gome Electrical Appliances Holdings Ltd, the listed unit of China's largest home appliance chain Gome Appliance, has agreed to pay HK$5.27 billion (US$675 million) to buy the nation's third largest home appliance retailer, China Paradise Electronics Retail Ltd.

Gome reported sales of 49.84 billion yuan (US$6.23 billion) last year, and China Paradise registered sales of 15.17 billion yuan, ranking No.1 and No.3 among Chinese home appliances retailers. After the acquisition, the new conglomerate is expected to have 626 outlets and see combined sales of 65 billion yuan, 1.64 times that of the Jiangsu Suning Appliances Group, another leading home appliance retailer.