Best Buy, the largest U.S. electronics retailer, entered China in 2006 by buying a majority stake
in Five Star, a Chinese electronics chain, with the opening of its 6,000-square-meter flagship
store in one of Shanghai’s expensive business areas. Its entry heralded a coup for both Best Buy
as well as the local electronics retail scene. For Best Buy, its entry into China, the second biggest
economy, allowed it to transfer its retail service expertise there. For Chinese electronic retail
stores such as Gome and Suning, having Best Buy in their backyard meant they had to up their
ante and demonstrate that they are worthy of foreign competition. Best Buy’s strategy was to
transplant its business model, which worked successfully in the United States, to China. Unlike
its Chinese competitors that targeted consumers with a limited budget, Best Buy targeted mid–
and high-end consumers. It also introduced valueadded services such as an extended warranty to
entice such consumers. In contrast to most Chinese electronics retailers who allow sales people
from different electronic brands to push their own products in the store, Best Buy employed its
own in-store people to offer non-biased service to customers. Best Buy believed that there
would be some Chinese consumers who were willing to overlook price in favor of service. All
things considered, Best Buy was going to distinguish itself on service. Said Bob Willett, then
CEO of Best Buy International, “We’ve become a service company in North America, and that’s
what we’re doing in China, too. Generally though, you don’t have a lot of homegrown talent in
China that knows how to do it. So we’ve had to create it ourselves.” And so began the service
training process. When its flagship store was opened, the service standard was outstanding. Best
Buy had trained its staff for more than a year. However, as it expanded, that initial talent became
