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Carrefour China Essay

1066 words - 5 pages

Introduction

Carrefour was established in 1959 in France by the Fournier and Defforey families. In French, it means “crossroad or intersection of thoughts and ideas”. It aims to integrate the concept of a large department store and the self-service concept. There are four main types of Carrefour stores: hypermarkets, supermarkets, hard discount stores and convenience stores.

Carrefour entered China in 1995 and opened the first Carrefour hypermarket in Beijing Nationl Exhibition Center. After a decade of its operations in China, Carrefour has achieved turnover of around US$2 billion in 2005, making China the fifth largest market for Carrefour.

Some of the issues of ...view middle of the document...

Differential pricing strategy that allows for profit maximization with the help of its pricing department. Store managers are also empowered to mark real-time price adjustements in reponse to market changes.

One-stop shopping concept was introduced by Carrefour. This provided consumers a great convenience as they no longer need to visit many shops in order to buy what they need.
Careful selection of locations. A precise and systematic strategy with investigations lasting for one or two years.

Localisation is a strategy to adapt to the local culture and business dealings. Carrefour first started out by implementing a localization program to recruit primarily local staff to help minimise communication problems within the firm. This also facilitates Carrefour in gaining a deeper understanding of the Chinese market. Secondly, decisions are made on the choice of commodities and store design that appeal to their customers’ needs and the type of customers in various store locations. Local joint venture partnership has also helped Carrefour to do business in China’s complex and differentiated market. One example would be its local partnership with Lianhua Supermarket which helped the company to liaise with the local government.

B. Analyze and compare China’s retail industry before 1995 and after 2004. What changes can be observed during the ten-year period between 1995 and 2004 that had a significant impact on the industy’s future competition?

Market changes:
Based on exhibit 1, number of retail stores has increased by 35.67% from 1998 to 2004, with an average annual growth rate of 5.26%.
Expected number of retail stores in 2005 =19,546,806

Exhibit 2 & 3 shows changes in ownership structure from stated-owned to individual, private and foreign-funded. By 2004, individual ownership of retail outlets was 93.43% of the total retail outlets in China.

Exhibit 7 shows that the market expanded by 75.91% from 1997 to 2004, with average annual growth rate of 9.87%.

The retail industry was concentrated at the coastal regions and major cities such as Shanghai, Beijing, Guangzhou and Jiangsu provinces. However with the growing competition, competitors are planning to move towards second-tiers cities in the inland regions and fast-growing rural areas.

Threat from local and global retailers such as Wal-mart (specializing in selling high volumes of merchandises at discounted prices) and Metro.

Government policies:
|1992 |Official reply to utilisig foreign investment in commercial retail regulated the opening up of the retail sector in|
| |some parts of China as an experiment before putting it into effect for the whole country. |
|1995 |Government began to lift its ban on Sino-foreign retail chains and foreign investment in the wholesaling and |
| |groceries sector. ...

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