09/13/2012 10:21 pm ET Updated Nov 13, 2012

Home Depot's Do-It-Yourself Model Fails In China's Do-It-For-Me Market

* Retailer will close all seven big box stores, cut jobs

* Company will retain two specialty stores in Tianjin

* Says closures will not affect earnings forecast

* Shifting to online retailing with top websites

By Dhanya Skariachan and Siddharth Cavale

Sept 13 (Reuters) - Home Depot Inc, the world's largest home improvement chain, will close all seven of its big box stores and cut 850 jobs in China as the retailer changes its focus in the Chinese market to online and specialty stores.

The company will retain two recently opened specialty stores in Tianjin and is "developing relationships with several of China's leading e-commerce websites," it said in a statement late on Thursday.

"China is a do-it-for-me market, not a do-it-yourself market, so we have to adjust," Home Depot spokeswoman Paula Drake told Reuters late on Thursday.

The company made its first foray into the rapidly-growing Chinese market in late 2006 through its acquisition of a 12-store Chinese chain called The Home Way.

However, it has struggled to expand ever since as it was a relatively late entrant into the market behind other international chains such as Britain's Kingfisher Plc which ventured into the world's most populous country in the late 1990s.

The company expects to incur a $160 million charge in the third quarter as a result of the closures, but said this will not affect its full-year earnings forecast.

Home Depot said it will continue to employ about 170 associates in China working in the sourcing offices in Shanghai and Shenzhen.

Shares of the Atlanta-based company closed up 2 percent at $58.30 on the New York Stock Exchange on Thursday.