With a little help from my friends: Multinational retailers and China's consumer market penetration

Abstract

We investigate the supply-side repercussions on Chinese imports after the entry of multinational retailers in China. We exploit sector- and origin-country level import data for a panel of Chinese cities between 1997 and 2012, and differentiate between retailer and non retailer goods and across countries of origin of imports. We find that international global retail presence in Chinese cities produces a disproportionate rise in retail good imports from the retailers' country of origin. Our results point to a trade-cost reducing role of Western retailers that make it easier for foreign retail-good producers from their home country to export to China. Global retailers then act as a bridgehead for the penetration of the Chinese market by producers from their home country, in a way that goes beyond higher sales of imported retail goods by the retailers themselves.