Home Depots Nightmarish EXIT from China - Assignment Example

Home Depots Nightmarish EXIT from China For what reasons is Home Depot exiting from the China market? Home Depot is exiting in China because of numerous reasons. To begin with, cultural difference is a factor because the Chinese culture is different from the Western culture. Chinese customers haggle too much with retailers (Saporta). Furthermore, Chinese vendors are not licensed to sell the Home Depot products and thus becoming hard for Home Depot to acquire products directly from the manufacturers.

Secondly, the increase in real estate costs. Acquiring or buying a building in China is difficult, hence Home Depot lease stores. However, the increase leasing renewal cost was a big hindrance to the growth of Home Depot. Thirdly, Home Depot wanted to get rid of the distribution network by eliminating middlemen and leverage worldwide supplier network which was hard. Lastly, Home Depot had been suffering from declining profits and only the change of the business model for example e-commerce (Saporta). 2. What role does Chinese consumer behavior play in these failed attempts by western retailers to succeed in their country?

The Chinese consumers haggle too much when doing their shopping which is unfavorable to the retailer. Furthermore, they do not buy some of the products for instance garage tools because they hire someone to do it for them (Saporta). In addition, Chinese do not shop alone without assistance which required Home Depot to hire and train tradesmen to meet their desired standards.3. Based on the insights you draw from the article or elsewhere, what are some strategies that you can recommend to retailer to have a smooth exit from a foreign country?

A safe exit strategy from a foreign market would be liquidation because there is no worry about change of control and no negotiations are involved (Cross). From the article, I derived that closing some of the retail slowly is a safe exit strategy. Selling the retail stores to a friendly buyer would also serve as a safe exit strategy because the buyer is known. Lastly, offering an Initial Public Offer (IPO) for it would increase the worth of the company (Cross).Works CitedCross, Colleen. Exit Strategy. [Canada?]: Slice Pub., 2011. Print.

Saporta, Maria. The Inside Story Of Home Depot’S Retreat From China - Atlanta Business Chronicle. Atlanta Business Chronicle. N.p., 2009. Web. 15 Apr. 2015.