Electrical appliance retailer Gome announced over the weekend that it is changing its business direction in Hong Kong to wholesale and bulk trade.
According to a local Gome spokeswoman, the company hopes to "take advantage of Hong Kong's edge in geographical location, commerce and trade to develop our international procurement business".
Earlier this month, Gome made a 300 million yuan (US$48 million) investment
in Quanfeng Express, a logistics company.
Gome's stores in Kwun Tong, Tai Po, Tsuen Wan, Tuen Mun and Yuen Long will close on 1 February, while its Causeway Bay branch will close on 16 March.
Hong Kong's electronics market is already dominated by Fortress and Broadway, two chains with more muscle in the sector. Efforts by Fleishman-Hillard Hong Kong, which was appointed as Gome's communications consultancy in February 2011, did not manage to achieve a turnaround for the Chinese brand.
Gome opened its first Hong Kong outlet in Mongkok in November 2003 and was listed on the Hong Kong Stock Exchange in 2004. At that time, the now embattled retailer had aimed to seize a 30 per cent share of the Hong Kong market.
In a statement filed to the stock exchange, Gome stated that the outlets operating in Hong Kong "do not form part of the group" and "will not have any impact on the financial position of the group". In its last interim report in 2012, the group had "no assessable profits arising in Hong Kong".
According to the Hong Kong Retail Management Association, in addition to factors like high rent, Hong Kong is not suitable for Gome's hypermarket business model.