An expansion plan sparked by confidence

Electronics retailer Media Markt China has only been in the Chinese market for about a year, but it is already planning to expand rapidly throughout the country.

In fact, chief executive Frank Bussalb is aiming to hit a target of opening 100 stores a year sometime over the next decade.

Bussalb, 49, who has been tasked with exploring the Chinese market and increasing the company's penetration, said a strategy has been developed to meet the target.

Media Markt, owned by the German group Media Saturn Holding, entered China at the end of 2010 and now has four stores, all in Shanghai. Its latest was opened in September in Minhang district, Shanghai.

By the end of this year, Media Markt should have six or seven stores operating, the company said.

Bussalb was appointed chief executive in August this year, following the resignation of Ton Wortel for "personal reasons", just nine months after Media Markt established its first store in Shanghai.

Wortel's sudden departure led some observers to speculate that Media Markt was not doing as well as expected. However, Bussalb said the company is on track to achieve its aims.

Electronics retailing has been booming in China in recent years as disposable incomes are higher and people's desire for a modern and urban lifestyle increases.

Figures from China Market Monitor, a consultancy that specializes in electronics business, show that sales revenue from home appliances in the retail sector reached about 1 trillion yuan ($158 billion; 117 billion euros) in 2010, an increase of about 18 percent over 2009.

Local retail giants Suning and Gome operate more than 1,000 stores each in China. Other foreign companies such as Japan's Yamada Denki chose to develop in provincial cities such as Shenyang in Liaoning province, where competition is not as intense as it would be in Shanghai or Beijing.

And while electronics retailers in general show great confidence in the Chinese market, the path for foreign companies has not been as smooth as had been expected.

For example, the United States-based electronics retail giant Best Buy closed its nine stores earlier this year, making insiders wonder if the Western retail model is suitable for China.

However, Media Markt is confident about its future in China. "We have a very unique concept," Bussalb said.

He said the company will continue to develop its localization strategy and seek to understand Chinese customers. It would also vary store sizes and offer products across a full price range to satisfy the needs of consumers.

"We are not setting up a German company here," he said. "We are very local and customer-oriented."

Bussalb said the number of stores is not the only gauge to evaluate the performance of a company. Service quality and profitability have to be considered, he said.