Carrefour's Entry into China Market - Case Study Example

Question 1 Carrefour was opened in 1959 in France. The company did grow in a huge way from that time and also expanded its business across to other parts of the world. After good business operations in a successful manner the company did make its entry in China. The retail market in China at that time had a huge scope for other companies both domestic and also retail companies coming from other countries. China had lifted the restrictions over foreign direct investment in retail sector opening a huge opportunity for the foreign retail companies to explore a huge market. Huge growth rate of the Chinese market every year with a percentage growth of about 40% Carrefour had a huge opportunity to explore. China being one of the fastest developing countries in the world has enabled a good economic growth in the country. As a result of such economic growth in the country the spending power of the people in China has also increased at a good extent. People opted to go to big retail superstores to make sure that they can buy good quality goods and also avail all the items from a single roof. Customers always wanted to get the best quality goods and were also ready to spend more to get good quality goods. Thus Carrefour going in the China had huge number of opportunities. The country also has a huge land area thus the company got the opportunity to get more and more place to explore and open outlets. Thus it got huge opportunity to capture more number of customers across the entire China and attract most of them by providing good quality products and service. Though the company also faced many problems while entering in China as there was a huge cultural difference and also it has to face much litigation that were imposed by the Chinese government. People preferred the home brand more than the foreign brands thus for the company it was a big challenge to attract the customers and make them belief and buy products from its retail stores. It also faced problems from the existing competitors in the China market who have already set up a good brand image in the customers mind. Question 2 For Carrefour entering into China the biggest challenge was from the Chinese government. It faced many problems and its business was been affected in a huge way because of the litigations, rules and regulations that were been set up by the Chinese government. Carrefour wanted to expand its business in many parts of the country opening its branches in Tianjin, Zuhai, Wuhan and Chongqing. Thus the company had its business plan of expanding its business in different parts of China. Carrefour had plans to grow at a fast rate in the country and expand along the whole country exploring new markets and attracting more customers. This would have helped the company to increase its revenue and also profit margin. But the companies plans were been effected in a huge way because of the Chinese government rules and regulations. The government in China had put restrictions over the imports to only 30% as a result Carrefour was not able to import all the materials from other countries as it had a supply chain network spread across in the world procuring the materials from the best of suppliers across the world. The state economic and trade commission did restrict Carrefour from expanding its business in China and also sell its 35% shares in fully owned business. The equity crisis in the country did affect a lot to the company’s expansion plans (Zhingang 12-24). The government of China only allowed one or two foreign invested retail companies in one city and didn’t allow others to entry as a result for Carrefour it faced huge restrictions in the way it expanded. Wholesaling was not allowed by the government thus Carrefour was not able to sell the products as a whole selling market in huge bulk quantities. Thus the governmental issues did affect the company in a huge way which did make it difficult for the country to expand its business in China and also have a good market share. Question 3 As the market is been evolving at a good rate and thus China was huge market to explore and most of the retailers that were present at that time were small retail shops. Carrefour did implement many good strategies to make sure it was able to expand its business and also get a good profit margin ever after so many restrictions put by the Chinese government. The biggest strategy it implemented was to get the best quality materials from the globally selected suppliers and thus provide good quality products to the customers. The service and also the products that were provided to the customers were been provided by taking the quality factor as the main consideration. The company made sure that it had a mass production system to produce the goods that were been sold to the customers in their supermarkets. This allowed the company to have a huge amount of economies of scale as a result the operational cost was less for the company. It maintained a flexible system even compelled the suppliers to be flexible enough to make sure that they can make the changes as per the change in the demand for a particular good. This did help the company to reduce the wastage of resources in a huge way and thus enabling the company to utilise the resources in the best possible way. The delivery of the good to the customers were been done on time and in the right manner to make sure that the customers can avail their order in time and in the right condition as they made the order. It did implement a good pricing strategy in China by providing the goods at a competitive price and also by providing good discounts to the customers to make sure that they can attract more number of customers. Thus implementing these strategies after understanding the needs and demands of the customers in China the company was able to expand in a good way in China and was able to have good revenue with good percentage growth of profit margin. Work Cited Tao, Zhingang. Carefour China: maintaining its past glory or drowning in the sea of competiton?. Hong Kong: Asia Case Research Centre. 2007. Print. Read More