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The retail industry in China - Essay Example

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The present study would try to analyze the retail industry in China with the aspect of foreign company trying to enter the retail industry in the nation. The opening up of the Chinese economy and its liberalization has increased the number of competitors in the market…
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The retail industry in China
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Download file to see previous pages f various consumer protection legislations like 1993 Chinese Consumer Protection Laws and others that have resulted in high bargaining power of consumer in the Chinese market (Zhuang, Herndon & Zhou, 2003, p.42). Bargaining Power of Suppliers In the past history Chinese suppliers had an edge over the retailer primarily due to legislative policies like the planned price based system. This helped the suppliers to have greater bargaining power. However with the abolition of this policy has led to suppliers in a situation of overstocking that has forced them to lower prices that has in turn heavily reduced the bargaining power of the suppliers. In addition to this the emergence of private label brands and supermarkets has also considerably dented the bargaining power of the suppliers. Hence it can be easily stated that the extent of this force in the Chinese retail industry is low (Zhuang, Herndon & Zhou, 2003, p.40-41). Threat of New Entrants The Chinese retail industry was initially highly protected by the government that made it difficult for new players to enter the market, however with liberalization coming in a step by step manner, the entry barriers have decreased owning to smaller economies of scale in the retail industry. However, the coming up of international supermarkets has also threatened the existence of small individual retailers and has also increased the entry barriers for the new players (Bird et. al, n.d., p.44). Competition among the Existing Players The opening up of the Chinese economy and its liberalization has increased the number of competitors in the market. The emergence of international retailers has further increased the extent of the competition in the retail market. The figure below shows the list of top ten retail brands in the multi brand...
According to the research findings the age of globalization has opened up a plethora of opportunities for business organizations operating in the present world. Globalization has rendered the entire world into a boundary less market with organizations trying to establish their presence in the market. The growth of free trade as well as emergence of developing economies like China and India also have opened up new vistas for firms trying to expand their business in the wake of saturation of the traditional markets of Europe and USA. However international expansion also involves considerable planning as there are considerable entry barriers in new markets as well as other forces that affect the business prospects of firms. The analysis of the Chinese retail market shows considerable advantage considering the rapid economic growth of the nation. The analysis of the five forces model reveals that the competitive landscape is very congenial for investing in the market. However certain entry barriers like government regulations can emerge as a considerable source of barrier for new foreign players to establish their presence in the market. However since the competitive landscape of the market has become extremely competitive hence, it has become somewhat difficult for new market payers and instantly grab the market share. The key lies in formulating an optimum service mix that can help in generating competitive edge for an organization. ...Download file to see next pagesRead More
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