Best Buy Inc. - Dual Branding in China

A month after Best Buy Inc. (Best Buy), the largest retailer of consumer electronics in the United States, acquired Five Star, the third largest retailer of appliances and consumer electronics in China in May 2006, the management of Best Buy is weighing in on a branding option. Should Five Star lose its identity and be marketed as Best Buy? Or should Best Buy retain the Five Star brand and let the two brands compete with each other in the Chinese market? The option has a sense of déjà vu because, when it first stepped out of its home turf in January of 2002 by acquiring Future Shop, the largest consumer electronics retailer in Canada, Best Buy was facing a similar dilemma. The company had decided, at the time, in favour of dual brand strategy. It had worked. There was no evidence of cannibalization, the single largest risk in dual branding. Best Buy and Future Shop had both grown together as independent brands in Canada. But, does dual brand strategy work in the vastly different retail environment of China?