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Chairman's Statement

Dear Shareholders,

There is a Confucian saying: “At thirty, I had planted my feet firm upon ground”. The age of thirty is a watershed moment, marking when a man should take on his responsibilities and become mature. The same can be applied to enterprises. However, a man grows to 30 years old simply through the passage of time, while an enterprise, to reach 30, must face countless choices, challenges, and competition.

On 1 January 1987, GOME opened a small store with only 100 square meters of space located at No. 420 Qianmen Zhushikou Street in Beijing, and gradually expanded, opening more stores to all parts of the country. From 2004 to 2010, we merged with China Paradise, Dazhong, and a number of other regional chain enterprises, reducing our market expanding costs and increasing our pace of development. In that time, we transformed our home appliance retail business – from a traditional general merchandise model to a specialized chain, leading China’s retail industry into the era of large-scale chains.

Now in the Internet era, as a brick-and-mortar retailer and a giant enterprise, GOME faces new challenges and pressures of transformation. However during this process, instead of being confused, we are aware of the importance of returning to the basics of retail – transitioning from an “appliance retailer” model, to that of a supplier of comprehensive products and services.

30 years ago, we opened the chapter of major retail in China; 30 years later, we hope to redefine retail. With the integration of online and offline channels, and increasingly better technology at our disposal, the resulting new retail model will become key to the future of our industry.

At the heart of GOME’s “Redefining Retail” concept is a focus on the widespread connections between people, between people and products, between people and enterprises, and between enterprises and products. As a result, stronger social connections are built, supply and demand are effectively met, and GOME is able to promote deeper value for consumers and a reconstruction of industry value. We aim to integrate both online and offline channels to create an ecosystem of social and business connections that puts customers first, products first, platforms first, services first, sharing first, and the customer experience first. This will form a new retail model that maximizes customer interest.

The redefining retail concept is guided by the principle of “Customers First .” This means customers can participate in every stage of a product’s life cycle, putting forward their needs and recommendations during product production, use, and ultimately, recycling.

“Products First” is the concept of protection for the new retail model. In the post-Internet era, the core of retail enterprises’ competitiveness has changed from the ability to “sell” to the ability to “innovate”, with innovation becoming paramount to success. “Products First” means that all goods and services on GOME’s platform are exactly what customers need and will buy. Therefore, we are building a community platform to discover customers’ needs, improve the precision between supply and demand, and lay the foundation for customization with low cost and high efficiency.

“Platforms First” is the vehicle to realise new retail. The Group is leveraging on the physical stores as its offline customer portal and the Internet platform as its online customer portal to enjoy their mutual benefits, sharing refined resources and providing excellent services to the customers in order to create value for the customers.

“Services First” is an inevitable extension of the new retail and the professionalization, standardization, and customization of services are the prerequisite of the new retail. As such, we launched “GOME House Manager” to keep track of customers’ after-sale needs with the help of big data. We are now able to efficiently connect members to stores, logistics, and after-sale resources, with the ability to offer services including repair, maintenance, cleaning, replacement, and recycling throughout the life cycle of an appliance.

With the “Sharing First” concept, we are building a new community and economy-directed consumption ecosystem, connecting customers with valuable portals. The structure will smooth our relationships with customers through sharing and in turn create more value for them.

“Customer Experience First” is the ultimate goal of the new retail concept. During our interactions with each individual customer, GOME pulls preference data, which it then analyzes and uses to promote upstream industrial upgrades. By doing this, GOME’s revitalized retail ecosystem puts customers at the core. In the new-Internet era, shopping experience is becoming a powerful tool to attract and retain customers and to enhance competitive advantages.

Online and offline integration is the space where we can best achieve the above-mentioned “Firsts.” Data is one of the greatest derivative values of this integration, which is not valuable simply for being “big,” but also its use in analyzing and generating new and powerful insight. By analyzing user behavior data both online and offline, GOME will be able to optimize its goods and services, and promote further development of the retail ecosystem.

When GOME originally focused on channels, we paid attention to the quality of our goods, unified services, and large supply chains. Today, we emphasize our six “Firsts” concepts, and the integration of online and offline. No matter what the strategy or process, our goals are always to serve customers and create value.

To conclude, I would like to express my sincere respect and appreciation to all my colleagues at GOME for your tireless efforts, and my gratitude to the greater community for supporting GOME through the years. We will continue to devote ourselves to balancing the benefit of shareholders, employees, and customers, and pursuing long-term sustainable development. I have confidence in leading GOME in its latest transformation, as we continue to grow, overcome challenges, and make our vision for new retail a reality.

Zhang Da Zhong