Suning Appliance Co, China's second largest electrical appliances retailer by sales, is planning to expand into the rural market at an aggressive pace in a bid to gain an upper hand over archrival Gome. This will be done through leveraging the government's rebate program for household electric appliances, Suning's president Sun Weimin told China Daily.

"Suning will open at least 1,000 stores in the third- and fourth-tier cities within five years," Sun said.

"A small number of these stores will be directly owned by Suning, and the rest will see investments by others interested in running our brand of stores."

Late last year, the company, which has 812 stores nationwide, announced it would open 200 stores this year. Gome, which owns 1,300 stores in the country, said there would be no change in the number of its stores this year. According to Suning's 2008 financial report, 134 stores out of the 812 are located in third- and fourth-tier cities.

The company is also thinking of opening stores tailored to the specific needs of consumers in small towns and remote rural regions, Sun said.

Compared to a traditional Suning store, which has a floor area of around 4,500 sq m, "the county store is smaller in size, at around 2,000 sq m," Sun explained. Suning opened its first rural store in 2002, in Changshu, Jiangsu Province.

The company is betting on the appliance rebate program to help enhance its brand awareness and sales. As an active player in the program, the company has won all the bids intended to promote the eight categories of household appliances in 14 regions. Suning plans to invest another 50 million yuan to subsidize stores in those regions that have not been included in the program.

Compared with urban areas, the rural electric appliances market has bigger potential.