Rumours that Media-Saturn will be withdrawing from China are getting more persistent. The Chinese market turns out to be a bigger challenge than Media-Saturn's owner Metro had foreseen.
Joint venture with Foxconn
According to Reuters, Metro will be withdrawing from China just two years after launching in the country, although their anonymous sources stress that these are still just rumours and nothing is official yet.
Europe’s biggest electronics retailer runs seven Media-Saturn stores in China in a joint venture with Foxconn Technology. At the beginning of the project, the German company was aiming for a hundred locations by 2015, but in October 2012 their CEO Olaf Koch had to admit that the Chinese market appeared to be a bigger challenge than expected. The seven original locations are rumoured to have made a loss of forty million euro in 2012.
This Chinese adventure has been a sore spot for some time and it saw a low point when German billionaire Erich Kellerhals revoked his support for it last November. Kellerhals isn’t just anybody: he is the founder of Media Markt and still owns 21% of its shares.
Kellerhals has been on a collision course with Olaf Koch of Metro, which owns about 75% of the shares of Media-Saturn, accusing them of not having a real strategy of only thinking about cutbacks. In an earlier interview he described Olaf Koch as someone “who knows about finances, but who is clueless about selling.”
Kellerhals mainly resents Koch for Metro AG missing the opportunity of taking over a Chinese competitor with more than a hundred locations: “With that we would instantly have created a strong foundation and a notable relevance on the Chinese market", he still believes.