China's leading home appliance retailers China Paradise and Dazhong Electronics signed a framework agreement to jointly develop new markets outside the cities where they have established strong positions.

Under the deal, Paradise and Dazhong will form 50-50 joint ventures in selected regional markets which the two companies have just entered, China Daily quoted Huang Jianping, a spokesperson for China Paradise, as saying.

The joint ventures will be responsible, in their respective regions, for the management of existing stores and business expansion. The stores will stock both brands, and the companies will share the profits and business risks, Huang said.

However, he did not reveal in which markets the cooperation will start. Some analysts predicted that they may choose Xi'an in the northwest and Qingdao in the east as the first steps.

"It is clear that the two retailers are looking for complementary cooperation in this hotly competitive market," China Daily quoted Sun Luan, industry analyst from China Securities, as saying.

Shanghai-based Paradise is relatively strong in east China and holds more than 50 percent of the market share in Shanghai. Dazhong is a local, but strong, player in the Beijing market.

"It could be a win-win deal, if the two companies join their efforts whole-heartedly," Sun said.

China's home appliance retailers have been seeking expansion and competing for a bigger market share during the past year. Paradise, for example, doubled its store number to nearly 200 this year. As a result, retailers are facing high risks when developing new markets.

Source: Xinhua