9 - The success and failure of global retailers in China

Abstract

This chapter presents an analysis on the success and failure of global retailers in China. After China opened its retail market, many global retail giants have entered the market by direct or indirect ways. However, few of them have developed successful models. They encounter many difficulties during their development of the Chinese market. Chinese conditions, such as the less developed Chinese logistics industry, the lack of retail management personnel, the diversified local cultures, the bureaucratic way of government administration, the high transaction cost, the diversified Chinese consumer behaviors, etc., make it hard for MNRs to transfer their own operation models developed abroad to China and realize localization in the short term. These conditions also weaken some foreign successful experiences or Competitive Advantages (CAs) or make them lose their edge in the Chinese market. The case studies suggest that even the world's largest retailer, Wal-Mart, and the world's most internationalized retailer, Carrefour, also face similar problems: neither of them have developed successful models in China after over six years of operations and still face many problems in their localizations. Wal-Mart in China has not been the complete and the real Wal-Mart; it will still take MNRs much time to develop their CAs and Chinese operation models, which provide Chinese retailers with some opportunities to catch up.