Background
Chen Xiao was born in Shanghai in 1958.
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Xiao Chen
Edit Profile晓 陈
Chen Xiao is the former president of Yongle, the third largest home electronic appliance retailer in China, which was founded by Chen in 1996 and acquired by GOME in 2006. Chen is also an executive member of the China Franchising Association, and deputy director-general of the China Retailing Industry Association.
Education
Chen received a masters degree in international business management.
Career
He began his career in Chinese home appliance retailing in 1985, and by 1992 he had been promoted to deputy general manager of a state-owned appliance company. Four years later, Chen launched Shanghai Yongle with RMB1 million and 47 employees. Initially focused on both wholesale and retail sales of home electronic appliances, Yongle was able to break the monopoly of the state-owned companies. However Chen later decided to drop the wholesale business and focus exclusively on retail as the core business. Under his leadership Yongle introduced a franchise business model and delivered high-quality appliances for free, a popular move that greatly boosted the company’s reputation.
With its quality service and low prices, by 2001 Yongle had become the largest home appliance retailer in the Shanghai metropolitan region. In the next year, Yongle’s sales reached RMB1 million and the company was ranked third in the domestic market after GOME and Suning. In January 2005, Morgan Stanley invested US$50 million in Yongle to become the third largest shareholder. In the same year, Yongle was listed on the Hong Kong Stock Exchange and its market value rose to HK $4.7 billion. A year later, Yongle was merged with GOME in a deal worth US$677 million.
Politics
Chen himself had considerable experience in mergers and acquisitions in the appliance industry. In the late 1990s, to enlarge Yongle’s market share Chen bought Dongze Electronic Appliance, Xiamen Siwen, Henan Tongli and Taiwan Chankun. Following his belief that mergers and acquisitions were an effective way to control competition costs between big magnates, which could otherwise lead to a substantial loss of resources for both sides, Chen agreed to the merger between Yongle and GOME.
Fully aware of the devastating effects of price wars, he regarded them as irrational activities that would bring losses to all participants. Despite the low profit margins in the home appliance retail industry, Chen has remained loyal to his trade and has put all his energies into the development of Yongle. Although Huang Guangyu, the president of GOME, used to regard Chen as one of his most fervent rivals because of Chen’s long-term insight, man- agement skills and innovative power, the biggest merger in China’s home appliance retail industry has made them colleagues.
As the decision-maker in Yongle, Chen spent a lot of his time on strategic issues, and he admitted that it would have taken at least ten years for Yongle to establish a market share equal to that of the combined company. After his role change from president to CEO, Chen now has to pay more attention to executive operations at GOME. Facing the new challenge, Chen believes the merger between Yongle and GOME has provided him with a much bigger platform for his capabilities.
Career
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1985 - 1992
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2006