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Struggling electronics retailer Laox Co. is in talks to sell a stake in itself to Chinese retailer Suning Appliance Co. and become a group company, sources said Thursday.

If the two companies strike a deal, Nanjing-based Suning will acquire new shares through a third-party allocation to become Laox’s leading shareholder.

It would also become the first Chinese company to hold a stake in a Japanese electronics chain, the sources said.

Suning has been expanding on the back of strong domestic economic growth. It is looking to enter the Japanese market by tapping into Laox’s expertise in store management and goods procurement.

Laox, meanwhile, would use the proceeds from the share sale to renovate its outlets in an attempt to turn its deteriorating business around, the sources added.

Laox’s consolidated net loss doubled to ¥12.56 billion in the year ended in March following a fierce price war in the electronics market.

Under its restructuring plan, Laox intends to close all its stores in Tokyo and surrounding areas except for the seven outlets in the consumer electronics shopping mecca of Akihabara.

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