For Immediate Release

GOME Electrical Appliances Manages and Operates Dazhong Electronics
Strengthens national network particularly in Beijing
Englarges income streams

December 16, 2007, Hong Kong --- GOME Electrical Appliances Holding Limited (HKSE: 493, “GOME” or the “Company”, together with its subsidiaries, the “Group”), the largest household appliances and consumer electronics retailer, announced the acquisition of Beijing Dazhong Electronics (“Dazhong”), the fourth largest electronic appliance chain in the PRC through the provision of a RMB3.6 billion loan to a third party company. The Group believes that the arrangement will strengthen its retail network and create additional income sources.

According to the option agreement, GOME will be granted an exclusive option to acquire all or any part of the registered share capital of Dazhong from the third party company.

GOME will manage and operate the business of Dazhong and in return, receive management fees – an amount equivalent to the relevant net profits of Dazhong, less the amount of interest payable by the third party company for the loan.

“We are very pleased that GOME can finally include Dazhong into its network. Dazhong has a strong presence in Beijing and is strategically important for the Group. GOME has been seeking to increase shareholders’ return through market integration and industry cooperation. The acquisition of Dazhong is a big stride towards this goal and helps the Group to reinforce its position as the leading retailer of electrical appliances and electronic consumer products in the PRC,” said Mr. Chen Xiao, President of GOME.

Dazhong was founded by Mr. Zhang Dazhong in 1982. At present, it has around 100 electronic appliances stores nationwide, of which 61 stores are located in Beijing, accounted for about 50% market share in the Beijing consumer electronics market, whereas GOME has 55 outlets in Beijing. By incorporating the network of Dazhong, GOME possesses over 100 outlets in both Beijing and Shanghai, representing an absolute advantage to be established in these two strategic locations.

Over the past 20 years, GOME has been succeeded in maintaining the leading market position by focusing on management and strategic planning, and achieving the multi-brand strategy. The expanded network will greatly enhance economies of scale for the Group. Managing the consolidated chain will enable GOME to achieve a higher degree of integration in the PRC market and in particular the Beijing area, reduce competition and stabilize market prices. Moreover, supply chain integration will also result in lowered supply costs and higher operating efficiency. GOME will reinforce its capability in differentiation of stories, logistics, information technology and supply chain management.

The management fees received from the third party company will provide the Group with additional income streams, which will in turn increase earnings per share of the Company.

Taking into consideration of shareholders interests, GOME adopts the above transitional arrangement to incorporate the network of Dazhong. GOME will first consolidate Dazhong and at suitable time, the assets would be injected into GOME by fulfilling all the necessary requirements according to the rules of government authority. Meanwhile, GOME understands that Dazhong would like to complete the acquisition as soon as possible.

GOME plans to finance the transaction by internal resources.


About GOME
GOME Electrical Appliances Holding Limited, the listed vehicle of the GOME Group, was listed on The Hong Kong Stock Exchange in July 2004 (HKSE: 493). The GOME Group was founded in China in 1987 and is engaged in the retail business of electrical appliances and consumer electronic products in China. It is the largest retail chain of electrical appliances and consumer electronics and the largest retail chain enterprise in China.

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For further information, please contact Hill and Knowlton Asia Limited:
Gary Li
(852) 2894 6239 / 9652 9002
gary.li@hillandknowlton.com.hk
Hoi-ni Kong
(852) 2894 6323 / 9807 2495
hoini.kong@hillandknowlton.com.hk