Home Depot Plans China Strategy
Pinning its hopes on China's US$50 billion home improvement
market, Home Depot announced plans to expand into the
growing market. Home Depot, which is listed on the NYSE
under the HDsymbol, had annual sales last year of US$64.82
billion.
Currently, the Atlanta-based company has stores only
in the US, Canada and Mexico. A new post was created,
Home Depot president of Asia, with Bill Patterson filling
the position. He will lead the company's efforts in China.
Patterson said that the company has had its eyes on China
for a considerable time. The home improvement market in
China is now fragmented, with many small local players.
A leading German home improvement chain, OBI, already
has a presence in China.
The country is now undergoing rapid urbanization, which
has led to a rapid rise in urban real estate prices, and
a need for home interior decoration and improvement services.
Ikea, the Scandinavian maker of cheap, well-designed furniture,
already has a strong
presence in the country, with large stores in all
of the major cities.
In the US, Home Depot has benefited from high labor prices
for skilled labor, which encourages Americans to improve
their own homes. This is different from China, where labor
is cheap and plentiful, and is often the single cheapest
element in home improvement. For this reason, Home Depot's
largest customers might not be homeowners, but interior
designers and construction contractors.
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