As, most likely, are most of the products sold in B&Q’s stores in its home market of Britain, she is told, which elicits a giggle.

One big difference, though, is that the Chinese have not embraced the do-it-yourself (DIY) craze the way Britons have. In China, it is all about BIY: buy-it-yourself. “People in other countries like to do DIY because they have more time. But here they are crazy about work,” she says. So it is not just foreign multinationals that enjoy China’s low labour costs – most customers opt to buy the supplies and pay someone to do the assembly, construction or repair work for them.

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At the Guangzhou store, which opened in 2003 and employs nearly 200 people, the biggest seller is tiles, followed by paint and lighting.

Competitive edge

B&Q has won first-mover advantage in the mainland’s budding home improvements market. A big shift has occurred in property ownership in China in the past 20 years; as the country has developed and its economy has opened up, home ownership has become more viable and attractive. More Chinese people own their homes than ever before.

In 2003, Kingfisher, B&Q’s parent company, decided to reappraise its international strategy. It pulled out of Brazil and left the US market to its American rival Home Depot. It turned its attention away from European markets, like Belgium, Germany and Poland, and looked to Asia instead: China, Korea and Taiwan, as well as Turkey, were pinpointed as the most promising markets.

In setting up a regional HQ, the company looked at the obvious places. “If you’re coming to this part of the world, the two hubs you look at are Hong Kong and Shanghai,” says Steve Gilman, a Scotsman who arrived in 1997 and serves as managing director of B&Q Asia and international director of B&Q plc UK. He compares the two mega-cities: “Both have good international airports, are business friendly and are geographically well placed. But for convenience, Hong Kong’s location is superior. Also, from a political point of view Hong Kong was the better option – as opposed to choosing mainland China or Taiwan and risking upsetting either of them.”

Hong Kong also came out ahead on schooling and overall quality of life as well as on the level of government support. “Both governments supported our investment but in Hong Kong it is easier to set up a company, and Invest Hong Kong has a good support structure,” Mr Gilman says. “Shanghai is getting better at this but it is still behind Hong Kong.”

Cost advantage

And here is the kicker: Hong Kong also turned out to be the cheaper choice. The property market has recovered somewhat since 2003 but prices are still not that bad, Mr Gilman says. But the real savings came on tax. Rather than having to equalise tax treatment with the company’s home country as per usual, thanks to a double taxation treaty between the UK and its former colony, B&Q Asia only pays Hong Kong tax. “By the time we added it all together, we figured it was half a million pounds cheaper to be here,” Mr Gilman says, tapping the desk in his office overlooking Hong Kong’s Quarry Bay.

The Hong Kong office, with 16 employees, handles finance, strategy, human resources and some product development. Essentially, it serves as a development support office for the B&Q offshoots as they launch into new Asian markets and grow. B&Q is moving into Taiwan and Korea, is looking at Thailand, Japan and Malaysia, and will soon start looking at India.

Expansion in China

The main priority now is building up business in China: it is the fastest growing market for Kingfisher worldwide. B&Q first set up business there in 1998, opening its first Chinese store a year later. By June 2005, there were two dozen B&Q stores in China; another four were due to open in August.

A recent acquisition of Germany’s Obi gives B&Q that company’s 18 China stores and HQ. All told, B&Q will have about 50 Chinese stores by the end of the year and the Obi stores should be fully converted to the B&Q format by this time next year.

“We’re already number one in mainland China – this makes us a strong number one,” Mr Gilman declares. (Number two is home grown chain Oriental Home.)

Having followed a sensible ‘east coast strategy’, as many foreign companies do when moving into China, B&Q is now spreading out across the western hinterland. From where Mr Gilman sits, the possibilities look practically endless. “How many stores can you have in China?” he asks rhetorically. “How long is a piece of string?” In China, it seems, very long indeed.