i. Integrated Channel Services Business
The integrated channels services business was established under the “Goodaymart” brand, and leveraged on the Group’s three core elements of distribution network, logistics and services, areas which economies of scale have been realized. It provides multi-brand home appliance distribution and logistics services through the just-in-time (“JIT”) model to the vast retailers and franchisees in the 3rd and 4th tier markets, so as to realize operations with a short turnover period and low costs..
In 2011, the Group continued to expand the home appliance distribution network through the adoption of a franchise model, improve the efficiency of Haier Stores with great efforts in expanding the multi-brand Goodaymart franchise network. As at 31December 2011, there were approximately 7,000 Haier Stores at the county level, with coverage close to 100% and nearly 30,000 sales points in total in China. The Group also strived to develop its distribution business for non-Haier brands. As of the date of this announcement, 16 Goodaymart joint ventures have been established in Shandong, Jiangsu, Liaoning, Xinjiang, Henan and other areas, focusing on the development of the local franchise network for 3rd party brands.
Subsequent to the Group’s acquisition of the logistics business in 2010 from the Haier Group, the progress of integration was satisfactory. In 2011, the Group focused on strengthening its network coverage in two ways: strategic allocation of warehouses and distribution resources, and shaping strategic capabilities to meet the customer needs of JIT logistics. The Group’s logistic services network spread throughout communities within 1st and 2nd tier markets, providing one-stop services virtually at customers’ doorsteps. As for the 3rd and 4th tier pilot regions, the network directly reached town levels, while also extending to villages. Currently, Goodaymart logistics has already realized a rapid response capability, that delivers products within 150 kilometers in only 24 hours, and within 250 kilometers in only 48 hours. In 2011, the Group invested RMB240 million to build first-level distribution centres in Qingdao, Zhengzhou, Shenyang, Foshan, etc. There were eight large-scaled distribution centres formally opened as at the end of 2011.
After-sale Service Sector
This segment targets to provide fast, convenient and high quality after-sale services to franchisees of the integrated channel services business, as well as value-added services for customers. Since the acquisition of the business in 2011, the after-sale network has been positioned as one of the three core networks for the integrated channel services business by the Group, offering after-sale services for various home appliance products in the distribution channels and ensuring that franchisees will receive first-rate services.
The Group established 5 call centres, approximately 8,000 service centres across the country and nearly 10,000 services stations at the county and town level, to provide 24-hour quality services in China. Leveraging on the above, the Group has become a leading professional home appliance after-sale service provider. During the year, building on the foundation of its original services model, the Group launched a premium one-stop solutions model, which included extended warranty and full-time online support etc., enhancing its customer word of mouth.
To improve the user experience and the online sales capabilities of the integrated channel services franchisees, the Group acquired e-Haier from the Haier Group in 2011. e-Haier interacts with users online, receives and forwards orders to Haier Stores, which will be responsible for physical sales and distribution, and ultimately creates added value for franchisees. Through the cooperation with Haier Stores, the Group realized 24-hour delivery to 100 cities in China. In 2012, e-Haier will adhere to its marketing strategy focusing on brand promotion, develop and manage more Haier Store cooperative members, to create a better online user experience.
Argos Joint Venture Company
In addition, the Group established a joint venture company with Home Retail Group (UK) Limited (“Home Retail Group”), a renowned home and general merchandise retailer in United Kingdom, to develop a general merchandise multi-channel retailing business under the brand “Argos” in China. Such cooperation will benefit from the Group’s vast distribution network and Home Retail Group’s general merchandising capability and supply chain management experience. The joint venture company is a strategic investment for the Group in this new business segment.