Top U.S. consumer electronics retail chain Best Buy Co. Inc. is speeding up its expansion in China, banking on robust demand in a fast-growing market that it entered just one year ago.

The company aims to open eight to 10 new stores in and around Shanghai over the next 18 months, far exceeding its earlier plan to add up to three outlets in 12 to 18 months, Robert Willett, chief executive of Best Buy International, told reporters in Shanghai.

Best Buy, which operates more than 800 stores in the United States and Canada, made its initial foray into China in June 2006, taking a 75 percent stake in the country's third-largest consumer electronics retailer, Jiangsu Five Star Appliance Co., a major player in the affluent eastern coast.

The U.S. company opened its first own-brand China outlet in Shanghai's upscale Xujiahui district three months later, selling its Magnolia home theatres, Gourmet Shop kitchen products and Geek Squad computer support services along with other brands.

The store is doing incredibly well, Willett said. To say that it exceeded our expectations would be an understatement.

The U.S. company is adopting a sales strategy that has proven successful in North America, where sales personnel work on a non-commission basis to guarantee unbiased advice.

Sales staff in Chinese retail chains such as GOME Electrical Appliances Holding Ltd. and Suning Appliance Co. Ltd. generally work on commission for various brands.

Willet said he was very encouraged by customer reaction so far but the firm had much to learn to better adapt to the Chinese market.

CAUTIOUS APPROACH

Best Buy, which competes with Circuit City Stores Inc. on its home turf in North America, is the first foreign retailer to gain a foothold in China's $100 billion a year consumer electronics market, which is growing at double-digit rates.

It faces tough competition from market leaders GOME and Suning, which are rapidly expanding.

GOME, China's top electronics retailer, merged with China Paradise Electronics last year and plans to open 170 new stores this year.

Number-two player Suning plans to add 180 to 200 outlets every year through 2010, its chief executive Sun Weimin said in September.

Willet said his company tended to take a cautious approach in new markets initially, but could speed up its expansion as it nails down the best model for developing its business.

Every market we move into, we take our time but we end up becoming the world's number one, he said.

Other executives added that Best Buy would not end up competing with its Jiangsu Five Star unit, which is more focused on China's smaller cities.

Five Star, which runs 146 stores, plans to add 20 to 30 outlets this year and could pick up the pace of expansion in 2008, a Five Star executive said.

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