|A Media Markt store in Shanghai. The electronics products chain has announced it is withdrawing from China due to fierce competition. (China Daily Photo)|
Europe’s biggest retailer of consumer electronics, MediaMarkt, has closed all its stores in China. The company had tried to replicate its European success in China. But it didn’t work primarily because of cost pressures.
MediaMarkt closed all of its seven Shanghai stores on Monday, but some customers still came by hoping for closing-down bargains. They weren’t even let in the door.
Customers said, “If there were people there, they seemed to be just looking. Because the tills were always empty, so I don’t think it is ever doing very well.”
“It is really a pity. MediaMarkt had more types of electric appliances than anybody else.”
Like its foreign counterparts such as Best Buy, MediaMarkt allowed hands-on try-outs for its products and plenty of customer service. But one expert says that kind of service doesn’t always work well in China.
Prof. Zhang Huiming from Fudan University, said, European consumers are more focused on consumer experience, but in China, consumers care more about the price.
Low prices were another strategy the company brought in from the European market. It allowed consumers to ask for a refund within 15 days if they found that what they bought from Mediamarkt was more expensive than from other retailers. But that was far from the right idea in China, where retailers are in an almost constant state of price warfare.
Prof. Zhang said, “Gome and Suning have grown fast these years, and already had a large sales volume in the market. As a new comer, MediaMarkt had many fewer stores, which meant it could be less competitive on pricing. It could no longer take the cost pressure.”
MediaMarkt took in 100 million Euros in China sales during the first nine months of last year, but that revenue was less than 5 percent of Suning’s, and the European firm lost 40 million Euros in China for the year.
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