Rumor: Manufacturers Stop Supplying Gome

Shanghai Securities News, 1/20/09

A source has revealed that unreasonable payment policies at Chinese home appliance and consumer electronics retailer Gome (0493.HK) have caused at least one supplier to cease deliveries to Gome since the beginning of the year. According to the source, before Gome pays suppliers, it demands they ship excess supply worth 150% to 200% of the accounts payable bill.

Companies including TCL Multimedia (1070.HK), Hisense (600060.SH), Changhong (600839.SH), and Konka (200016.SZ, 000016.SZ) are all owed relatively large sums by Gome and, with the exception of small shipments from Konka, have essentially ceased deliveries to the retailer.

The source claimed that manufacturers are regularly forced to send representatives to Gome's Beijing headquarters to expedite bill payments from the company, and some manufacturers have even permanently stationed employees in Beijing exclusively for this purpose.

Keywords: 000016.SZ 0493.HK 1070.HK 200016.SZ 600060.SH 600839.SH Changhong consumer electronics Gome Hisense Konka TCL Multimedia home appliances retail

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