HOME Depot Inc., in deciding to close all seven of its remaining big-box stores in China after years of losses, joins a growing list of retailers who have stumbled in China by failing to grasp the local culture and importing alien business models that are better suited to the U.S. or other countries.

The retail giant, which entered China in 2006, plans to close its remaining seven big-box stores in the country.

The largest U.S. home-improvement retailer has struggled to gain traction in a country where cheap labor has stunted the do-it-yourself ethos and apartment-based living leaves scarce demand for products like lumber.

Home Depot conceded that it misread the country’s appetite for do-it-yourself products. “The market trend says this is more of a do-it-for-me culture,” a Home Depot spokeswoman said of China.

Mattel Inc. shut its China-based Barbie flagship store in March of last year after it learned that Chinese parents would rather have their children read books than take a doll for a spin in her plastic Corvette. Best Buy Co. closed its nine China outlets in February 2011 after discovering that Chinese consumers needed washing machines and air conditioners more than espresso makers and state-of-the-art surround sound stereo systems.

Industry insiders say many foreign companies have been too rigid with their approach to the China market. “You have to be nimble and willing to react quickly to changes,” said Peter Lau, chairman of Hong Kong-based apparel retailer Giordano International Ltd., speaking at a retail conference in Shanghai last week.

Home Depot is shaking up its strategy by focusing on specialty stores. Three months ago, it opened one paint-and-flooring store and one home-decorations outlet in the northern port city of Tianjin to cater to specific needs and shopping preferences shown by Chinese consumers, the spokeswoman said. It also plans to launch online operations with a Chinese partner, she said, without naming the company.

Home Depot debuted in China with a 12-store acquisition six years ago and the number has since dwindled as it found that Chinese consumers differ from their global counterparts. As Swedish furniture giant IKEA discovered, Chinese consumers will pay for people to do the work for them. Several years ago, the furniture store added services to help customers assemble their furniture.

Home Depot’s closures will cause the company to take a US$160 million after-tax charge in the third quarter, a company statement said. The charge will be equal to about 10 U.S. cents per diluted share.

Home Depot’s seven closings will affect around 850 associates, who will receive severance packages and job placement assistance, a company statement said.

Home Depot will continue to employ 170 staff who will work in its sourcing offices in Shanghai and Shenzhen and its new specialty stores.

Analysts said China’s slowest economic growth in three years is also causing companies, including domestic ones, to rethink their strategies. Retail sales in August rose just over 13 percent year-on-year, slower than the 17 percent climb in August 2011.

Walmart Stores Inc. executives said in August that the U.S. retailer would open fewer stores in China next year, halving the square footage that the company originally forecast.

British retail giant Tesco Plc. is closing four stores in China this year to focus on more efficient operations, executives have said.(SD-Agencies)