Kingfisher buy boosts B&Q in China

Kingfisher swooped on a faltering Chinese rival yesterday, paying £7m for five stores to expand its do-it-yourself chain in the world's most populous nation.

Kingfisher swooped on a faltering Chinese rival yesterday, paying £7m for five stores to expand its do-it-yourself chain in the world's most populous nation.

The group is buying the stores from PriceSmart, a local Chinese business franchised from the US company Price Club. It will convert the outlets to its B&Q format next year, which already trades from 20 stores, making it the country's leading DIY player.

The Chinese government's abandonment of Communist housing principles has sparked a boom in the country's nascent home improvement market, helping B&Q's Chinese arm to report its first profit earlier this year. Unlike in Britain, many Chinese homeowners prefer to pay a builder to do their work for them. B&Q runs an installation service in China, which provides 25 per cent of its revenues.

Yesterday's move puts Kingfisher in an unassailable position just as foreign interest in China is growing. Under the agreement struck to enter the World Trade Organisation, the country will lift its restrictions on foreign chain retail operations by the end of the year.

Kingfisher's acquisition takes B&Q into China's west and north-east. Its existing estate is centred on the four major cities in the east of the country: Beijing - which boasts the world's largest B&Q - Shanghai, Shenzhen and Guangzhou. Ian Cheshire, who heads Kingfisher's international operations, said: "This deal enables B&Q to accelerate its expansion there." Its Chinese arm made a profit of £400,000 on sales of £131m in the year to January 2004.

A spokesman for Kingfisher said buying the sites from PriceSmart made sense because China's planning permission was getting stricter. The group plans to open up to nine B&Q stores in China next year.

In June, Home Depot, the world's biggest DIY retailer, said it was planning an aggressive push into China.