Gome Is Tops in China

In its 15 years of existence, Gome Electrical Appliances has become China's largest electronic retailer—with a 12% market share according to the company's internal estimates. The Beijing-based company started by selling TV sets, air conditioners, and refrigerators at low prices by cutting out the middlemen and purchasing directly from manufacturers. Now, Gome (despite the unconventional spelling, the name is pronounced Guo Mei and means "beautiful nation") has shifted its focus to selling Dell (DELL) laptops, Apple (AAPL) iPod nanos, and Motorola (MOT) cell phones. "Small items don't occupy too much of the store space, but the margins may be even better than the traditional electronics," says Wang Gao, a professor at Tsinghua University who runs an executive development program for Gome.

Gome's new strategy has helped propel the retail giant to No. 46 in 's Asia 50. Hong Kong-listed Gome's profit surged 38%, to $165 million, in 2007 on sales of $6.2 billion. Goldman Sachs (GS) is forecasting Gome to earn $394 million in profits this year from sales of $7.2 billion. Gome's actual profits and sales are most likely even higher because parts of the company were not injected into the listed company when founder Wong Kwongyu took Gome public through a back-door listing in June 2004. According to Gome's 2008 interim earnings report, its listed entity had 828 stores in China as of June 30, but Gome says the group currently has 1,300 stores.