Mao’s famous red book is being redone in orange. Chinese news sources today are reporting that Home Depot is poised to invest $15.5 million to open stores in China, now that the retailer has been given a green light to proceed by the Chinese Ministry of Commerce. The new company for development in China will reportedly be called The Home Depot (China) Building Material and Home Improvement Co Ltd, with registered capital of $6.2 million. The company will be headquartered in Shanghai, and will sell hardware, decoration materials as well as furniture for retail and wholesale. The president of Home Depot Asia had indicated his company planned make possible acquisitions or directly open stores, after buying a 50,000-to-60,000-square-meter plot in Shenzhen province. Home Depot currently has two procurement plants in Shanghai and Shenzhen, Guangdong Province, from which the company imported to the United States as much as $6 billion worth of Chinese products. That’s $6 billion worth of products — and the manufacturing jobs that make them — that might have been American made before Home Depot sourced from China.
Home Depot is the largest home improvement company in the world, and the third largest retailer in the world, behind Wal-Mart and the French Carrefour. The retailer had $73.1 billion in revenues last year, twice the size of its nearest competitor, Lowe’s. It’s massive importation of Chinese goods has helped create the largest trade deficit with China in United States history. Now the Chinese will feel the other side of the sword as Home Depot opens up stores and forces small Chinese merchants out of business. Overall, China will come out ahead in the deal, exporting $6 billion through Home Depot to the U.S., at the price of some job losses back home. But for Americans, we get cheap Chinese goods that cost us American manufacturing jobs, and major retail job losses at smaller stores. Thank you Home Depot, for increasing our indebtedness to China. Or should we call you Shenzhen Depot?
