Home Depot (HD) is getting a piece of the fast-growing Chinese retail market with the purchase of The Home Way, a Chinese retailer that will add 12 stores in six cities and will give Home Depot access to a $50 billion home improvement market that is growing at 20 percent each year.
According to this Reuters.com article, China's billion-plus population and rising homeownership are luring many foreign retailers.
Home Depot is banking on earnings in the future, something they aren't expecting today. The company has more than 2,100 stores in the United States, Canada and Mexico and the move into China fits their plans for multiple channels for growth, including foreign expansion and a move into professional contractor markets.
Home Depot has been looking to move into China for at least the last two years and had been looking a number of China companies before settling on The Home Way. They have had an agreement for the last 10 years to share best retail practices.
Home Depot's expansion into China will more than likely follow the pattern set in expansion in Canada and Mexico - via acquistions followed by the building of their own stores.
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