Chinese DIY superstore aims for Home Depot-like growth - International Pages - Brief Article

Home Channel News, Jan 22, 2001 by Jason Gonzalez

Orient Home striving to be No. 1 in a growing market

BEIJING -- Orient Home, the four-unit Chinese home improvement warehouse retailer that debuted in August 1999, recently revealed plans to open between six and 10 new stores by the end of this year. Orient Homes has larger ambitions to open a total of 40 stores by year-end 2003 and 1,000 outlets by 2010.

After opening three new stores in 2000, in the mid-sized Chinese cities of Jilin, Shenyang and Chengdu, Orient Home is set to establish six "regional centers" this year. These regional centers, according to Zhao Ying Qaing, Orient Home's manager of information technology, are subsidiary companies developed for the purpose of opening a new store. These regional centers will be charged with executing the company's store-opening plans this year.

"The fast expanding can reduce the cost and hold the market," explained Wang Yue, president and CEO of Orient Home. "This is the essential element of the chain store."

Orient Home is not alone in its desire to dominate an emerging Chinese retail DIY market. An estimated seven companies are operating at least 20 DIY warehouse stores in China today. Included among those players are homegrown operations, such as The Home Way and Homemart, and international joint ventures, such as B&Q and OBI China. While it is tough to pinpoint the exact size of the market -- and each retailer seems to have its own estimate -- the numbers do suggest that the DIY market is, at the very least, worthy of some retailer investigation.

One source, the Chinese Ministry of Construction, said the total sales of Chinese "house fitting-up and decoration" in 1999 were approximately 120 billion Chinese renminbi (US$14.5 billion). During the next two to three years, that figure is expected to climb to 300 billion RMB (US$36 billion).

Last year, Orient reported some remarkable sales results out of its 15,000-squaremeter (162,290-square-foot), 30,000-sku Beijing store. Zhao Ying Qaing said the Beijing headquarters store recorded year-end revenues of 2.5 billion RMB (US$302 million). The company did not divulge its chainwide sales.

Orient Home frequently compares itself to American-style retailers in general, and to Home Depot in particular. The chain has connections to both. Prior to joining Orient, Wang Yue served as president of The Home Way, China's first DIY warehouse, from 1994 to 1998. The Home Way received a great deal of consultation from Home Depot before it opened for business. Orient also purchased a retail information technology system from the Scottsdale, Ariz.-based JDA Software.

"Orient Home will overcome the difficulties [of the market] and provide the best service to our customers like Home Depot does in the U.S.A.," said Zhao Ying Qaing. "We believe Orient Home will become the number one DIY retailer in China."