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Mark O'Neill

The biggest retailer of electrical appliances in China, a private company owned by the country's 27th-richest man, plans a listing in Hong Kong and is opening two stores there to raise its profile, according to brokers.

An official of Guo Mei Group said  it made a profit of 103.55 million yuan (HK$97.04 million) last year on sales of 10.9 billion yuan. Its target for this year is 20 billion yuan.

Guo Mei, founded in Beijing  in 1987, follows a strategy of high-volume sales at a low margin. Its stores are large and offer a  variety of domestic and foreign brands.

Brokers said the firm aimed at raising between HK$800 million and $1.5 billion from the listing,  originally planned for the first half of this year but postponed because of the poor market conditions.

The underwriter will probably be Paribas Peregrine.

To raise its profile in Hong Kong, the firm is opening its first two stores. One is due to open in Mongkok next month, with a floor area of 25,000 square metres, for which the firm is paying a monthly rent of 1.7 million yuan. It is negotiating for the site of the second.

It is also opening a store in Shenzhen close to the Huanggang 24-hour crossing, aimed in part at visitors from Hong Kong.

Guo Mei is a subsidiary of Hong Kong-listed Pengrun Investment Group. Both are majority owned by the  founder of Guo Mei, Huang Guangyu, who ranked 27th on the list of Forbes' 100 richest people in China last year, with assets of US$195 million.

Mr Huang's is a rags-to-riches story. In 1987, he left his native Shantou, in Guangdong - the home town of Li Ka-shing - with his elder brother, Junqin, with 4,000 yuan in their pockets to make their fortune.

In 1988, they took over a small  store that belonged to a state clothing factory, but found that clothes did not sell well and switched to electrical appliances.

During the late 1980s, Mr Huang struck lucky - it was the era the Chinese were buying colour televisions, refrigerators and air-conditioners for the first time. He expanded his stores all over Beijing and later in cities in the Yangtze and Pearl river deltas.

The firm aims at having 200 outlets nationwide  this year.

Electrical appliance retailing is a fiercely competitive business in China.



Mainland retail giant Guo Mei plans listing in Hong Kong