Company confirms the pending departure of chief executive officer

SHANGHAI - Media Markt China Ltd said it will continue to expand in China and plans to open two or three more stores by the end of the year, after its top officer resigned.

The company confirmed in a statement on Thursday that Ton Wortel, chief executive officer of Media Markt China, will leave his position by the end of this year and return to Europe.

Ton Wortel, chief executive officer of Media Markt China, posed at the opening of the company's second outlet in China in Shanghai on Feb 24. The German retailer said the resignation of Wortel will not affect its plans in China. [Photo/China Daily]

Frank Bussalb, vice-president of procurement at the international headquarters of Media-Saturn Group, one of whose retail brand is Media Markt, will take over Wortel's position from Aug 1.

However, the Chinese unit of the German retailer said its plans for China will not change and the goal for 2015 is still to have 100 stores.

Media Markt has a similar business model to Best Buy Co Inc, which closed all of its branded stores in China this year.

Analysts said it is a bit late for international companies to enter the Chinese market and their business models are not suitable for Chinese consumers.

"Suning Appliance Co Ltd and Gome Electrical Appliances Holding Ltd have established solid customer bases and brand awareness in China" before foreign companies could enter, said Qi Xiaozhai, director of the Shanghai Commercial Economic Research Center.

"It is an advantage that foreing competitors will not find it easy to overcome in the short run."

The closure of the Best Buy-branded stores has become a good case study for new entrants in the market. Differentiation and price sensitivity are two main issues that demand more attention from retailers, he said.

Best Buy still runs a local chain known as Five Star Applicances, which it took over.

"Consumers are paying more attention to the brands of the products rather than the brand of the retailer. So the key is whether Media Markt can offer something unique," said Qi.

He said the development of online-trading platforms has mounted a strong challenge to digital product retailers in malls in China because consumers can go online and get the same products for less.

The saturated market is also increasing competition for digital product sellers.

Scott Chu, the chief executive officer of CyberMart, a retailing arm of Foxconn International Holding Ltd, disclosed to China Daily that Cybermart plans to open the first directly managed outlet in China at the end of 2011.

The store will not be as big as the current Cybermart outlets, but it will give more attention to service and the shopping experience.

Media Markt entered the Chinese market at the end of 2010, with its first store in downtown Shanghai.

Foxconn, the largest electronic omponents maker in the world, holds a 25 percent share in Media Markt China.

Media Markt is slowly becoming familiar with the Chinese market, and the company said its business is on track to expand in line with its plans for 2011 and 2012.