Best Buy is to exit its retail operations in China.

The US appliance retailer said it sold its 184-store Five Star branded chain to the Jiayuan Group, a prominent China-based real estate firm led by chairman Yuxing Shen.

Best Buy entered the Chinese retail market by purchasing a majority interest in Jiangsu Five Star in 2006 for US$180 million. It soon introduced its own brand, opening nine Best Buy stores, but shuttered them in 2011 after failing to gain traction against well-established local rivals.

Last year, Best Buy’s Chinese operations contributed about four per cent of the company’s overall sales and the sale is not expected to have a material impact on the operations, financial position or cash flow of the company.

Hubert Joly, Best Buy’s president and CEO, said Jiayuan, “a respected Chinese investment group”, had recently approached the company and offered to acquire the Five Star business with a view to expanding it.

“Over the last two years we have worked to improve our business in China and are proud of the progress we have made there.

“The Jiayuan Group has agreed to work with Five Star COO Yiqing Pan, who will become CEO of Five Star. Mr Pan has been with the business for many years and has a deep respect for Five Star employees, as well as a vested interest in continuing to work with them to build a stronger presence in China,” Joly said in a statement.

“The sale of Five Star does not suggest any similar action in Canada or Mexico. Instead, it allows us to focus even more on our North American business.

“We will also continue to invest in and grow our China-based private label operations, with brand names that include Dynex, Insignia, Modal, Platinum and Rocketfish,” Joly added.

The deal, still subject to regulatory approval, is expected to close in the first quarter of fiscal 2016.