First Carrefour, Now Best Buy Is Closing A Bunch Of Stores In China

best buy china

Photo: IceNineJon on flickr

There’s a dark cloud hanging over the world’s biggest consumer growth market.Last week the largest foreign retailer, Carrefour, began winding down franchises across China.

Now Best Buy says it will close all nine of its stores in China. Best Buy will focus on developing a local chain it owns, Five Star, which sells cheaper products.

Wal-Mart also lowered its outlook for next year. CEO Mike Duke ominously said “Some of the pricing and merchandising issues in Walmart ran deeper than we initially expected, and they require a response that will take time to see results.” We assume this relates to the Chinese market, which has driven sales growth in recent years.

What’s wrong with China? Rising input costs are shrinking margins, especially as the government limits pricing options. Meanwhile, wages remain low and consumer demand is weak.

Of course some companies are managing just fine, like Yum! Brands.

See the incredible story of how KFC took over China >

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