The Home Depot Inc. (Atlanta) has signed an agreement to buy Chinese home improvement chain The Home Way (Tianjin, China), marking its first foray into retailing in China.
The acquisition will give it 12 stores in six cities and access to a $50 billion home-improvement market that is growing at 20 percent per year, the U.S. company said.
The Home Way, founded in 1996 by chairman and ceo Du Sha, was the first big box home-improvement retail chain in China, and its stores average 90,000 square feet of selling space in some of China’s biggest markets: Tianjin, Beijing, Xi'an, Qingdao, Shenyang and Zhengzhou.
“The acquisition of The Home Way provides us with an immediate presence in this country,” said Annette Verschuren, president of Home Depot Asia/Canada. “I anticipate we will grow as quickly as, if not quicker than, the market.”
Home Depot said the deal had received necessary Chinese government regulatory approvals and is expected to close by the end of the year. Terms were not disclosed.
Home Depot has been looking to set up stores in China for at least two years. The company opened purchasing offices in Shanghai and Shenzhen in 2002, and received approval from China's government to invest in stores there in 2005.
“This acquisition provides us with a great point of entry in one of the world's largest and fastest-growing home improvement markets,” said chairman, president and ceo Bob Nardelli. “The Home Way is a strong brand that is already established as a value and price leader among Chinese consumers.”
Home Depot’s competition in its new marketplace will include B&Q, a division of London-based Kingfisher Plc., which bought the Chinese operations of German rival OBI in April and is on track to having 60 stores in China by the end of this year and 100 by 2010.