One of China’s top building materials and homewares companies, China Lesso Group Holdings, is buying two sites in Sydney to build up a local operation that may see it take on market heavyweight Bunnings.
The Hong Kong-listed group has bought a bulky goods site in the inner western suburb of Auburn and is picking up a warehouse development in the western suburb of Prospect as it lays the base for a local business.
The company manufactures a comprehensive range of building materials and interior decoration products from about 20 “advanced production bases” in mainland China.
China Lesso’s move into Australia may be driven by its diversification from its major business lines — plastic pipes and pipe fittings, building materials and interior decoration products — into e-commerce.
It set up Lesso Mall, a platform for hardware, electrical equipment and building material products in China, last year out of a warehouse in the central Chinese city of Wuhan, which it now hopes to take global.
“With continued investment in information technology and logistics, enhanced customer services and more diverse products including hardware, electrical equipment and building materials, the introduction of Lesso Mall to the southern China market has already generated a revenue of 621 million yuan,” the group said in its annual report.
China Lesso has warned that this would be a challenging year in China because of market volatility but it added its Lesso Mall would be developed into a competitive business.
The Chinese giant swooped last week on a site offloaded by the listed Dexus Property Group at 79-99 St Hilliers Road, Auburn for $65m.
The office park was identified as more suitable to being a large goods centre and could serve as a pick up point for products bought from Lesso Mall.
China Lesso is also eyeing the acquisition of a parcel of industrial land in Sydney’s Huntingwood East. The 21.56ha of vacant industrial land carries general industrial zoning and fronts the M4 Motorway and Great Western Highway.
The property is being sold by the NSW government but its property arm and marketing agents Savills have declined to provide details. A spokesman for Property NSW said that “following evaluation of tenders received, a contract for sale was exchanged early August 2016”.
China Lesso hopes to develop Lesso Mall into an e-commerce business for sourcing of hardware, electrical equipment and building materials, and is also planning to expand to Toronto, Bangkok and the US.