UPDATE 2-Metro to open Media Markt in China, takes on rivals

* To grow in China organically rather than by acquisitions

* Says to open around 100 stores globally for Metro Group

* Says impact of Greek debt crisis on business is minimal
(Adds background, quotes)

By Melanie Lee

SHANGHAI, May 20 (BestGrowthStock) – German retailer Metro Group
(MEOG.DE: ) will open its first consumer electronic shop in
Shanghai this October as it banks on rising incomes and
increased demand for consumer goods in the world’s most
populous country to boost the firm’s growth.

Metro will open 100 stores worldwide this year, raising
investment by more than a quarter to 1.9 billion euros ($2.4
billion), the firm said in a statement on Thursday.

“After a period of reduced investment in 2009, we will step
up our expansion speed significantly this year,” Eckhard
Cordes, Metro’s chief executive, said.

Metro, the world’s third-largest retailer after France’s
Carrefour (CARR.PA: ) and U.S. giant Wal-Mart Stores (WMT.N: ),
teamed up with Foxconn International (2038.HK: ) in a $200
million joint venture to bring Media Markt to China.

“We wouldn’t come to this country and we would not
invest…If we were not convinced we can break even after a
reasonable number of months, or years,” said Cordes.

However, China’s electronics retailing scene is fiercely
competitive. China’s Suning (002024.SZ: ), the country’s largest
electronics chain by market value, said it plans to add 520 new
stores in 2010, on top of its existing network of 941 stores
while rival GOME (0493.HK: ), with more than 700 stores in the
country, has announced plans to push into rural areas.

Best Buy (BBY.N: ), the world’s largest electronics retailer,
said it plans to open 10-15 stores in China this year.

“There will be a serious competition on prices…That’s how
markets act. On the other side, there is enough growth
potential for each and everyone,” said Roland Weise, chief
executive of Metro’s Media-Saturn Group, which oversees the
Media Markt brand.

Weise said he prefered to grow organically in China rather
than to grow through acquisitions as Best Buy did when it
entered the Chinese market, buying local competitor Jiangsu
Five Star Appliance in 2006.

FOOD BUSINESS

Metro also aims to boost its wholesale grocery business in
the mainland by opening about eight new stores in China and a
total of 16 in Asia this year, Frans Muller, chief executive of
Metro’s Cash & Carry Asia Unit, told a news conference.

The group, which has more than 40 Metro Cash & Carry
wholesale stores in 34 Chinese cities, said it sees the
potential for more than 100 stores in China.

The company plans to open around 30 new Cash & Carry stores
this year worldwide.

Muller said expansion in China for its cash and carry
business will concentrate around Shanghai, Beijing and
Guangzhou as well as neighbouring cities, given the high
population densities and ease of logistics in those regions.

Metro, which makes over 90 percent of its sales in mainland
Europe, could be adversely affected if the euro zone debt
crisis delays a consumer recovery, analysts said.
[ID:nLDE64D0T4]

“There will be a small impact but it will be minimal,”
Cordes told reporters.

Investing

(Additional reporting by Farah Master; Editing by Jacqueline
Wong and Lincoln Feast)

UPDATE 2-Metro to open Media Markt in China, takes on rivals