Best Buy’s China Puzzle Remains Unsolved.doc

Best Buy?s China Puzzle Remains Unsolved From February 22, 2011 to now, the U.S. electronic appliance retailer Best Buy was away from China for almost one and half a year. The schedule of returning to China at the end of last year was infinitely delayed. On April 10, Best Buy announced the resignation of its CEO Brian Dunn, soon after its closure of 50 stores thanks to the expansion of Amazon?s online business and Best Buy?s shift of the core point of growth to opening 100 mobile phone distribution stores in the 2013 Financial Year. In addition, Best Buy decided to cut the cost of 800 million U.S. dollars by 2015. When choosing to quit China last February, David Song, president of Best Buy China, said that Best Buy?s return would be based on ecom- merce and small-sized mobile phone distribution stores. However, it is known Best Buy began to test the model of small-sized mobile phone distribution stores by opening a store in Shanghai in 2008. The store finally broke down in 2009 due to poor profit margin. This means that Best Buy cannot get a foothold in the “sophisticated” Chinese market with the unsuitable business philosophy and pattern no matter for big malls or small stores. As its Chinese rivals represented by Gome and Suning are still growing at a fast pace, Best Buy?s inspiration to get back to China becomes smaller and smaller. The news about Dunn?s resignation was first heard on April 10. He also gave up his position as a director in Best Buy?s directorate. Best Buy?s official announcement said that Dunn?s leaving was not related with the corporate operation, finance and process; instead, his resignation underlines the serious challenges the company is facing. When the news was released, Best Buy?s stock increased by 52 cents or 2.3% to 23.17 U.S. dollars on April 10. Two weeks before Dunn?s resignation, Best Buy announced a corporate restructuring plan, which was to close 50 big stores in the United States and replace them with 100 small mobile