Home improvement firm OBI sells China operations to rival Kingfisher after bitter dispute with partner Haier
A leading European home improvement company has sold its entire operation in China to its biggest rival following a bitter dispute with its mainland joint-venture partner.
OBI, a unit of Tengelmann Group, yesterday said it had sold its 13 mainland stores, including its Shanghai headquarters, to Kingfisher, which owns B&Q, the leader in China's home improvement market. B&Q has 22 mainland stores, which recorded sales of GBP212 million ($3.14 billion) in the past financial year.
The acquisition of its biggest rival - OBI was ranked second in the mainland market - represents a coup for B&Q but increases its dependence on China to offset falling sales in its core markets in Britain and France.
Official estimates put the annual growth of the construction materials industry in China over the next 10 years at three to four percentage points higher than the country's economic growth, reaching about one trillion yuan in 2010, as millions of people move into new homes. Many homes are bare concrete which require heavy spending on interior decoration.
The sale is a major blow for Tengelmann, Germany's seventh-largest retailer and the 14th largest in Europe. With the German market saturated, it is being forced to go into new markets, in eastern Europe and elsewhere like other retailers.