Get the free version of Marbridge Daily delivered to your inbox

Click here to subscribe

Gome Ex-Chairman Alleges Widespread Supplier Kickbacks

Donews, 5/10/11

Chen Xiao, former chairman of Chinese home appliance and consumer electronics retailer Gome (0493.HK), recently alleged that Gome requires suppliers to pay substantial fees to retail their products in Gome stores. He added that the increasing costs of the kickbacks are ultimately passed on to consumers, driving prices higher than those through other channels such as e-commerce and eroding Gome's competitive price advantage. Gome's largest suppliers, such as Haier and Siemens, take approximately 55% of revenue from sales of their products in Gome's stores, while smaller manufacturers such as Zhejiang-based home appliance maker Sacon receive only a 25% revenue share after various fees are deducted.

Chen also claimed that in addition to annual contract fees with Gome's headquarters, suppliers pay substantial fees at every layer of the company from regional offices to sales counters. Ordinary sales counter managers receive more than RMB 10,000 a year from suppliers in exchange for better counter space and product placement, according to Chen, who said that Gome's share incentive plan launched in July 2009 was not only aimed at retaining executives but also at limiting the extent of these kickbacks.

Editor's Note: For more information on this topic, please see "Gome Confirms Dazhong Founder Appointed Chairman," MD 3/10/11 issue.

Keywords: scandal Chen Xiao consumer electronics retail revenue Gome revenue share 0493.HK home appliances pricing hardware


Please note, all fields are required.
None of your personal information will be shared with third parties.



The information contained in this newsletter is based upon sources that Marbridge Consulting believes to be reliable, and we have made every effort to translate the original articles or article excerpts as faithfully as possible. However, Marbridge Consulting makes no warranty of and assumes no legal responsibility for the accuracy of either the original source material or the English language translations.

Marbridge Daily Premium

Interested in gaining full access to all newsletter articles and the Marbridge Daily archive? To learn more about premium subscription options, including pricing, please:

Click here

Marbridge Consulting RSS Feed

Marbridge Reports