Best Buy has struggled in China market from beginning. The company went into China in 2006 by taking a majority stake in Nanjing-based retailer Jiangsu Five Star Appliance Co for $180 million. But China has never been particularly profitable for them.
One of problems was that the retailer's own-brand stores never adapted to the local market or succeeded in wooing the Chinese customer, who often shops on e-commerce sites like 360buy.com. Chinese customers "are either going to get the best price online" or use that price to negotiate the best price in stores, said Yao. Also, the company also failed to customize its stores to the local market.
Despite the loss, investors welcomed the news and sent shares up to their highest level in a year. Some believe pulling out of China would enable Best Buy to focus on competing more effectively with Wal-Mart Stores Inc and Amazon.com Inc in the United States.
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