France's Saint-Gobain closes China DIY stores
French construction group Saint-Gobain said Thursday it had closed its La Maison building material stores in China, the latest western company to fall victim to China's tough retail market.
La Maison's 8,000 square-metre (86,000 square-feet) flagship store and six design showrooms in Shanghai, China's wealthiest city, stopped operating this week, Saint-Gobain China spokesman Nicolas Nie told AFP.
The closure comes as several western companies are being forced to rethink their China strategy.
US toy maker Mattel shut the world's first and only Barbie concept store in Shanghai on Monday and US electronics giant Best Buy abruptly closed its nine China outlets last month.
Other global home improvement retailers are also paring back.
US DIY giant Home Depot closed its last Beijing store in January due to operational difficulties. It has seven stores left in the country after closing five outlets since entering the market in 2006.
Britain's Kingfisher, operator of home improvement chain B&Q, began closing some stores in China in 2009.
Do-it-yourself retailers have struggled for years to find the right formula in China, but Saint-Gobain's Nie said government measures in recent months to cool a booming property market were the final setback for La Maison.
"The property tightening is indeed harsh and more and more homes were sold with pre-decoration in first-tier cities like Shanghai. Therefore the market prospect to serve individual customers is not so good," Nie said.
La Maison accounted for less than one percent of Saint-Gobain's total annual revenue in China, Nie added.
Over the past year, China has raised minimum down payments, banned second and third home purchases in some cities and last month for the first time introduced property taxes in Shanghai and Chongqing.
Residential property sales in terms of floor space in Shanghai slumped 69.3 percent in February from January to a three-year low, according to leading property website Soufun.
© 2011 AFP