When British people buy bathtubs, seeing is believing. So when British retailer B&Q opened its first store in Shanghai in 1999, it put the tubs on the upper shelves - and found customers climbed up to get a closer look at them. In the second store, it put the tubs on the floor - and they sold well. It is details like this, adapting a foreign model to Chinese consumers, that help to explain why B&Q has become one of the most successful foreign retailers in China, with sales in the year to January of GBP131 million ($1.96 billion) from 21 stores, up from GBP5 million from one store in 1999-2000. It is the top home-improvement retailer in China's fragmented market. Today, under its obligations to the World Trade Organisation, China lifts restrictions on foreign retailers, allowing them to open stores anywhere, operate without a local partner and buy from suppliers that previously had been allowed only to export. Foreign companies now have in the region of 8 per cent of China's retail market and today's changes provide them with a good opportunity to increase their share. But this expansion is subject to approval by the government, which will ensure domestic firms dominate. Like other foreign firms, B&Q has ambitious plans for the post-December 11 era - a nationwide network of 80 stores in 26 cities within five years. Next Saturday, it will open its 21st store, in Wuxi, the first in which it owns 100 per cent. In addition, on November 26 B&Q's parent company, Kingfisher, announced the acquisition of five leasehold hypermarket stores in China from PriceSmart, a privately owned Chinese firm, for GBP6.95 million. The vacant stores will be converted to B&Q formats next year. Its success here has been due to careful planning and learning from trial and error, according to China president David Wei. 'The first objective was to establish ourselves in the four most important cities - Beijing, Shanghai, Shenzhen and Guangzhou,' he said. 'Their level of income, consumption and property market is at least double that of the other 30 cities in China with a population of over one million.' Of its first 18 stores, 12 were in the big four and the other six in five second-tier cities. 'Our rival OBI has nine stores, of which three are in the big four and six in smaller cities,' said Mr Wei. 'Land in the big four is more expensive than elsewhere but will be even more expensive next year. Why wait until the land is more expensive to enter? Our target of 80 stores by 2008 is to be 50 per cent ahead of our nearest competitor and guaranteeing quality at the same time.' The next piece of the jigsaw was to adapt a model honed in Britain for Chinese consumers. Chinese live in homes much smaller than those of British people and have no tradition of do-it-yourself. The cost of labour is a fraction of that in Britain, so people can afford to pay workers to do repair and decoration jobs. Many Chinese buy empty apartments, equipped with nothing more than a toilet and pipes for water and gas. So B&Q set up a decoration service in each store in China - the only country in the world in which it offers such a service. Customers can order their products and arrange for installation at the same time. As a result, 25 per cent of the products it sells in China are installed by its own staff, while 65 per cent are installed by a third party. In addition, since most customers do not have cars, it delivers to their homes free of charge if they spend more than 1,800 yuan. The company tried five store styles. The first, costing 72 million yuan, was entirely imported from England, down to the last screw, and the second, in a converted factory and costing 23 million yuan, was built entirely with domestic materials. The third, costing 150 million yuan, has two storeys, for cities with a high land cost. Through these trials, B&Q decided on the two models it now uses, one with two storeys and an average size of 15,000 square metres for the big four, the other a single-storey with 10,000 sq m for other cities. Facing high land costs, the company is flexible. One store in Shenzhen is beneath six residential tower blocks, with a garden and swimming pool on its roof, and one in Chongqing is below a school, with a playground on its roof. 'There is no textbook for retail. You learn through trying,' said Mr Wei, who, paraphrasing one of the favourite sayings of Deng Xiaoping, added: 'It does not matter if a cat is black or white, as long as it makes money.' Operating as a multinational brings advantages, in terms of finance and economy of scale. 'If we see land we want, we can offer to pay four years of rent in advance, something domestic companies cannot afford,' he said. 'We can also pre-pay the cost of construction, so we can secure the best sites.' Its scale of purchasing enables B&Q to negotiate very low prices with suppliers and offer them national exposure, while most of its competitors operate in only one city or region. Mr Wei describes his management headaches as the 'four Ps' - politics, property, people and products. Despite the liberalisation offered from today, every new store will still require official approvals from national, city and district governments, ensuring that Mr Wei has many meetings and banquets to look forward to.