Foxconn Technology Group on Wednesday demonstrated further intentions to diversify its business by signing a memorandum of understanding (MOU) with Metro Group of Germany to form a joint venture that will operate retail stores in mainland China. The future retail chain will be yet another “3C” chain of outlets that will sell computers, communication equipment and consumer electronics.
“The consumer electronics channel of Metro Group (of Germany) is the market leader in Europe; through mainland China’s strategic alliance with Metro, Foxconn Technology Group shall be able to provide strategic partner customers a more complete and efficient end-to-end services,” a statement by Foxconn (the official trademark of Hon Hai Precision Industry) with Taiwan Stock Exchange reads.
By helping to establish a retail chain in China, Foxconn will not only be able to help its customers to sell products made under contract at its manufacturing facilities, but will also be able to eventually sell own-brand products in those stores. In addition, the firm diversifies its revenue streams and also establishes better ties with a huge customer in Europe.
Media Markt and Saturn stores operated by Metro Group in fifteen European countries are well known for lowest prices as well as many bargains offered to consumers. But in order to be successful in China, Metro either had to acquire a well-established retail chain in the country, the way it expanded in Europe, or find a financially and preferably technologically and logistically strong partner within the country to build a new network of outlets. Foxconn seems to be a perfect ally for Metro’s expansion into China.
“China is the fastest growing large economy in the world. Since we already are assortment and price leader in Europe, we are well-positioned for the growth strategy for China with our strong joint-venture partner. We look forward for the co-operation with Foxconn Technology Group,” said Dr. Eckhard Cordes, chief executive officer of Metro Group.
The joint venture between Foxconn and Metro will be based in Shanghai, China. The first store is projected to be opened in 2010 in Shanghai as well.