Not just content to be a retailing force in Australasia, Harvey Norman Holdings (HN) has made its move for a determined push into Asia with a joint venture buyout of Singapore-based electronics retailer, Pertama.
Harvey's national financial director, John Skippen, confirmed yesterday the group had engaged in a joint venture with Asian sporting goods retail giant Ossia International. The new company, to be known as Harvey Norman Ossia (Asia) has secured a controlling share in Pertama which also has substantial wholesale activity in Malaysia.
"The opportunities in Asia are quite substantial," according to Skippen. "From our point of view, partnering with Ossia is a good mix because they have vast experience in the region. Together, we will be injecting a new lease of life into Pertama."
Skippen said HN had taken a 60 per cent holding in the joint venture that outlayed $S33 million (about $A30 million) for the stake in Pertama with Ossia putting in the rest.
The plan is to expand the range of electrical goods and then introduce computers and furniture as well as the highly successful franchise model it has used in Australia as the opportunities present themselves.
Computers are not critical to the equation, he said, but they definitely represent one of the huge retailing opportunities in Asia.
"The opportunities will come thick and fast and the Asian market will evolve rapidly," Skippen said. "By getting involved with a company that knows the region, the downsides are negligible."
Skippen denied that moving into Asia indicated that HN had saturated the Australian market.
"The market in Australia is still growing," Skippen said. "Our new Domayne chain has six stores at the moment but there is an opportunity for that to grow to 50 or 60 at least. As far as HN is concerned, there is plenty of expansion left.
"Our market analysts have indicated that we could have a store anywhere where there is about 20,000 people and that means there is something like another 70-90 stores available to us under that scenario."
Skippen also said that once the move to Singapore had been consolidated, expansion was highly likely into other Asian regions including Taiwan, South Korea and China.
"We will assess the possibility of further expansion more closely once we have looked at Pertama itself and brought our management people in to take control," he said. "In that way we can assess the opportunities as they arise and they definitely will once we are there.
"It is a move that is sure to gain a fair bit of publicity over there."