China’s once-mighty electronics retailer Gome will continue to support its brick-and-mortar business while doing much more to develop its e-commerce side, especially in terms of live-streaming, according to an open letter from company president HUANG Xiuhong Thursday morning.
In the letter, Huang said Gome is struggling to survive, adding that all attempts to turn the business around, whether online or offline, have fallen short. Huang said it was time for him to “reflect on the past” and try to understand where the company was heading now.
Gome was one of a wave of retailers that took advantage of the rise of China’s middle class during years of breakneck economic growth. Huang Xiuhong's brother Guangyu who founded Gome and rose from selling electronics on the street to building a US$6 billion (40 billion yuan) fortune, was once China’s highest-profile entrepreneur.
But in 2010, Huang Guangyu was sentenced to 14 years in prison for insider trading and other offenses. That happened just as JD.com and Alibaba were accelerating the digitalization of China’s retail landscape. Though Huang was released on parole in 2020, pressure on the company remains.
Gome posted an earnings preannouncement on January 30. The company expects to have made a total loss of 560 million yuan (US$83.38 million) in 2022.
Gome’s stock has fallen over 70 percent over the past year but surged over 20 percent in the afternoon to HK Gome’s stock has fallen over 70 percent over the past year but surged over 20 percent in the afternoon to HK$0.18.
