Atlanta, GA, October 3, 2005—-According to the Atlanta Journal-Constitution, Home Depot has moved a step closer to opening stores in China, a key growth frontier with a $50 billion home improvement market.
The newspaper said the company received approval from China's Ministry of Commerce to invest $15.5 million in stores, the Shanghai Daily newspaper reported on its Website Friday.
Home Depot said in a statement that it's "continuing with its plans to develop stores in China," but it declined to comment on the Shanghai report.
It's unclear whether Home Depot will build stores from the ground up, partner with other companies or pursue both strategies as it tackles the huge market.
Earlier this year, chairman and chief executive Bob Nardelli said the company's approach to China will be similar to Canada and Mexico, where the chain entered through acquisitions. But Nardelli didn't rule out organic growth.
Home Depot faces fewer barriers to entry since China joined the World Trade Organization four years ago and the country relaxed its policies. The government no longer requires retailers to join forces with Chinese joint-venture partners to do business there.
Previous speculation pegged Home Depot in a marriage with the United Kingdom's largest home improvement retailer, Kingfisher, whose B&Q and OBI home improvement stores operate in China.
So far, however, nothing's happened.
With growth opportunities waning in the United States, Home Depot executives have set their sights on international expansion beyond North America.
Chinese consumers spent an estimated $50 billion on home decor items in 2004, up from $30 billion a year earlier, according to the China National Interior Decoration Association.
China's ballooning rate of homeownership and enormous economy is attracting retailers. Besides Home Depot, Wal-Mart and Best Buy are among national retail chains going after China's growing middle-class consumers.
Home Depot's biggest rival, Lowe's, will open stores in Canada in 2007, but it has no plans yet for China.
Last year, Home Depot established a business development office in Shanghai and announced it would open stores but did not say when.
Chuck Elias, 40, vice president of China operations, is serving as Home Depot's top executive there until a replacement is found for Bill Patterson, president of the chain's Asia operations, who retired in August.
"Before Patterson left, I thought Home Depot would open stores this year," analyst McGranahan said. " But things are clearly in progress."
