Chapter 4: Gome and Suning: The Making of Retail Business Empires in China

New knowledge-driven corporations are emerging in rapidly developing countries such as China and India. This chapter explores the birth and growth of two different knowledge-driven corporations in China’s retail industry. Clearly each found and leveraged different knowledge but both grew to dominate their markets through different strategies and operations. A critical component of the success of both corporations was their use of supply chain management strategy. These two examples demonstrate that knowledge drives the corporation through their stormy nights and opportunity-rich environments.

Although both companies have come to appear as magnates of the household electric appliance industry in the eyes of their customers, Suning and Gome conduct business in their unique ways. Western countries took 150 years to develop their industrial status; China is attempting to create a thriving retail trade within 10 years. For example, during the decade-long development of the household electric appliance retail industry, competition has moved metaphorically from vassals fighting for the throne to magnates battling for territory. Hu Xueyan, a businessman of the Qing Dynasty, once claimed: “If you have a midland taste, you can make midland business; if the taste is provincial, you can make business in one province.” For Gome and Suning, the original tastes they served have led them to become two dazzling industrial stars, one looming across Beijing and the other shining in Nan King.

Although both these domestic retail magnates have become 10 billion Yuan business empires in the same retail industry, their business methods entail a variety of both similarities and differences.