At first, you may not be able to decide if this is just a crazy idea or an idea so crazy that it just might work. Home Depot (NYSE:HD) announced today that it's got its eye on China.
In a brief press release, the firm named Bill E. Patterson to head the business development operation. Chairman, President, and CEO Bob Nardelli said, "Based on our success in expanding to international markets, I am confident of the portability of our model to China."
I don't know that I'd be quite so smug. To date, Home Depot's "successful" international operations are found in Canada and Mexico. Consumers in those two countries behave an awful lot like we do here in the U.S. Things are likely to be much different in China.
Both the Chinese citizen and the Chinese landscape lack a lot of the commercial resources that we take for granted on this continent, like the ubiquitous giant car or relatively quick access to the wide arteries that feed strip malls and megastores. And while the Chinese appetite for things like cars and cell phones is pretty well established, you have to wonder if they'll snap up plywood and drywall with the same enthusiasm.
That doesn't mean that the big-box concept is impossible in China. Wal-Mart (NYSE:WMT), for instance, runs a few dozen Supercenters and Sam's Club stores, proving that the concept can succeed.
Since there are no firm plans for the number of stores, or the format they will take, Home Depot will undoubtedly work hard to figure out exactly what will work for its Chinese operations. I'm betting shoppers on that side of the Pacific will see fewer two-by-fours and lawn tractors, and a lot more paint, fixtures, and other finishing products. Either way, this is a development worth watching. If Home Depot can score a hit in China, shareholders will be richly rewarded.
For more Fool coverage of Home Depot:
- Home Depot helps K-Mart (NASDAQ:KMRT) out of the abyss.
- See how Lowe's (NYSE:LOW) is keeping the heat on.
- Why you shouldn't doubt Home Depot.
Fool contributor and frequent thumb hammerer Seth Jayson thinks he personally contributed about 10% of Home Depot's revenues last quarter, but he owns no company mentioned. View his Fool profile here.
