Hit by declining profit at home, Beijing-based Gome Electrical Appliances Holding is quietly exploring expanding to the Middle East through a joint venture company with a Lebanese businessman.
People briefed on the matter told the South China Morning Post that Gome, the mainland's second-largest home appliance retailer, was in early talks with an investment firm led by a wealthy entrepreneur from Lebanon.
The people declined to name the Middle East businessman in talks with Gome but would only say he had close personal ties to the Saudi prince Alwaleed bin Talal, a major investor of US financial services giant Citigroup. '[The businessman] approached Gome first and then they both thought it was a good idea to explore,' said one of the people who asked not be named because the discussions were confidential.
The potential move to expand abroad comes as Gome has been under increasing pressure. Last last month, Gome reported its first-quarter net profit sank 88 per cent to slightly more than US$10 million as sales fell nearly 30 per cent.
Shares in Gome, meanwhile, have lost more than 45 per cent of their value on the Hong Kong market since the start of the year, partly due to the company's weak business performance. The broader market has gained about 3 per cent.
If successful, the Middle East deal would mark the first international expansion for Gome, which was the mainland's No 1 home appliance retailer at one time, but later lost in the competition with current market leader Suning Appliance.
