International Law

Home Depot In China. It's Complicated.

By Dan

Home Depot recently closed down its last Beijing store and the media has for the most part ascribed that to a lack of a Do It Yourself (DIY) culture in China. Though I do not for a moment doubt that China for the most part lacks such a culture, I am not at all convinced that is the sole (or even the main) reason for the closures in Beijing. 

I have read a number of books and articles on China's consumer and retail culture and I have engaged with many true experts in the field and all that allows me to make one point and one point only: China's retail is incredibly complicated. My law firm has clients unbelievably successfully selling products in China that I would have thought had absolutely zero chance of success and other clients who have failed to succeed with products that everyone thought were sure winners. Like consumers just about everywhere else in the world, China's are fickle, mercurial and unpredictable. 

Back to Home Depot. 

There could be a million reasons for its failure in Beijing and the analysis ought not to ignore that it still has six stores in Tianjin?  Are those six stores making money? Is Tianjin really that different from Beijing? Did the Tianjin stores "make it" because they are more clustered, making for better distribution or better name recognition?  Who knows? I sure don't.

Yet at the same time, I persist in thinking there is some lesson to be learned from Home Depot's Beijing failure (is it premature to call it a China failure?).  Was it too soon? Was it in the wrong place?  For an excellent article that helps raise more questions (but in my mind necessarily fails to really answer them), check out "Home Depot fails to convince China to DIY," on MSNBC.com. 

What do you think?

Full post as published by China Law Blog on February 09, 2011 (boomark / email).