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Carrefour¡¯s Story in China

China is a red-hot market for global retailer with its huge population, soaring economy and inadequate experience in retail industry. Global giants have been desired to gain a firm foothold in this seducing market. 

Every successful enterprise has its own advantages and policies. Carrefour¡¯s success in China attributes to its wise policies which are applied globally, but that¡¯s not the topic here. What we¡¯d like to discuss here is some of its special stories in China.

Carrefour has operated in Taiwan, China for years before its entry into Mainland. Its experience in Taiwan has paved the way for the entrance of Mainland market. Carrefour lifted the opening curtain for its story in Mainland with its first hypermarket being opened in Beijing in December 1995.

In its expanding strategy, Carrefour focuses on big cities, costal cities and developed cites. It has penetrated into Shanghai, Shenzhen, Beijing, Tianjin, Shenyang, Wuhan, Chongqing in succession over the years and built up its brand power.

Carrefour mainly concentrates on East, Middle, and North China. It only opened four stores in South China, where per capita income is relatively higher, because its big rival Wal-mart has already occupied South region.

Statistics show, Carrefour has established 57 outlets over 24 cities in Mainland China. It tops other foreign-funded retailers. The headquarter observed that they hope to open another 12 stores in Beijing, Shanghai, Guangzhou and Shenzhen respectively and 6 to 8 new stores in other big cities.

Mr. Huang Jiangming, associate professor of the School of Business in Renmin University of China and a famous retail specialist, figured out that the key reason for Carrefour¡¯s success in China lays with its deep understanding about operation model in the underdeveloped business market. Carrefour knows how to make use of chances.

Mr. Huang pointed out the following three opinions:
First, foreign stores are difficult to gain foothold in developed countries with a mature market such as the United States, where the market structure is almost fixed and big shopping center is no longer the mainstream. However, in most third world countries, the big shopping center model of Carrefour is in accord with local purchasing power, therefore it is able to blend into the mainstream. 

Second, its profit does not depend on the wholesale and retail price differentials, but on access fee, premises advertisement fee, other various fees and some smart tricks which might be strictly prohibited in developed countries, but available with exceeded free in developing countries which are still in need of a perfect law system.  

 Third, suppliers in third world country are not as strong and united as those in European countries and with no support from associations, they can hardly have negotiations with Carrefour. Carrefour governs suppliers in these countries and regions and suppliers are just obedient.

In China, Carrefour purchases 90% of the goods from local suppliers to fulfill its principal of offering cheap and suitable goods. And Carrefour multiplies goods varieties to meet Chinese people¡¯s habit of making purchasing decisions after comparing different selections.

Shi Rongle, president of Carrefour China also concluded three successful points in China with his ten-year experience. First is to find a most excellent partner in the region or city in which you want to make investment. Second is to make a 100% right choice of the location of the store. The population of this location has to reach 200,000 within a space of three kilometers in radius, and consumer can reach the store in ten minutes by foot, bicycle or car. Third is to choose the right store director no matter what his or her nationality, because only the most suitable people can shoulder the biggest responsibility. ¡¡

Source:  
Editor: Grace
Date: 2005-4-4 14:35:00

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