Retail subsidiary of Foxconn encounters Waterloo

Wan Ma Ben Teng (WMBT), a wholly owned home appliance retail subsidiary of Taiwan-based electronics manufacturer Foxconn Technology Group, is closing stores in many provinces, and has halted supply to some areas since early February, the China Business News reported Thursday, citing employees at several WMBT stores.

The closures indicate another setback for Foxconn's foray into the retail sector on the Chinese mainland and come after the company's consumer electronics joint venture, Media Markt China, said recently that it would pull out of the mainland market on March 11.

WMBT, which started up in the mainland's smaller cities in 2010, is nearing its end, Liu Buchen, a home appliance expert at Zhengzhou-based Jiachunqiu Media, told the Global Times Thursday.

"Even though there are still WMBT stores in operation, they must be struggling," Liu said.

Liu Kun, a Foxconn spokesperson, said Thursday that the company does not comment on its retail business.

The company planned for quick expansion nationwide, so the project was done in a hurry and mismanaged, a former manager of a WMBT store in Changshu, East China's Jiang­su Province, told the Global Times Thursday on condition of anonymity.

The WMBT chain stores, owned and operated by Foxconn employees, were the contract manufacturer's attempt to set up a distribution network. Foxconn founder and Chairman Terry Gou said in 2010 that he planned to open 10,000 WMBT stores by 2013, but as of Thursday only 39 were listed on its website.

The Global Times made calls to 10 of those stores Thursday, but no one answered and some numbers were no longer in service.

As a contract manufacturer of products for technology firms such as Apple and Hewlett-Packard, Foxconn should have cost advantages, but in fact, WMBT's costs for some products tended to be even higher than the prices offered by other retailers, and some stores frequently ran out of stock, the former manager of WMBT said.

He left WMBT after working there less than a year, as his store stopped operation due to poor performance, and other store managers who started at the same time have almost all left the company for the same reason.

Foxconn's electronics B2C website E-feihu.com, which was also set up in 2010, is currently in the process of liquidation and will soon cease operation, Internet information provider ebrun.com reported on March 1.

Foxconn's attempts at retailing failed partly due to its lack of retail chain experience, Liu from Jiachunqiu said.

He said that local appliance retailers Suning and Gome have dominated the market, leaving few opportunities for newcomers.