Best Buy Co. Inc., the largest U.S. consumer electronics retailer, is likely to choose Shanghai as the venue to set up its first mainland store after losing a competition with a local rival for renting a Beijing commercial building, reported Thursday's China Business News.

The electronics giant planned to used a 15,400-square meter commercial space which was being vacated by Swedish furniture giant Ikea.

But the plan was stymied as Pengrun Electronics, a subsidiary of China's top electronics retailer GOME, secured the lease contract with the owner of the commercial building at 20 million yuan (2.5 million US dollars) a year, less than that paid annually by Ikea in the past six years, to open its first Beijing store.

An official at Best Buy's Asian headquarters was quoted as saying that "their first China store will be most likely in Shanghai".

Although Best Buy offered 80 million yuan (some 10 million dollars) as yearly rent, the owner of the commercial building preferred Pengrun for its 15-year contract, terms of payment and good credit and financial strength of the parent company GOME, the report said.

Over 30 companies including leading Chinese electronics companies Shanghai Yongle, Dazhong and Suning also joined the race.

Pengrun, which sells only high-end electronic appliances, is said to have set up several big stores in Beijing and will reach Tianjin, Shanghai, Guangzhou and Shenzhen this year.

Ikea will move to its new store in northeast Beijing, which covers 40,000 square meters, its biggest store in Asia and the second largest in its global chain.

Source: Xinhua