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Chapter 1

Chapter One - Foreign Retailers in China.docx

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Stephen Swales

Chapter One: Foreign Retailers in China - Stories of Success and Setbacks by Shuguang Wang and Paul Du Introduction 1. 1990s Wrigly, Lowe created TNC allowing foreign investments(pol't and economic approach) Vida and Fairhurst (1998) 1. Direction and pace of retail internationalization changed by firm/external retail 2. Key: resource availability (ie. consumers/cond.) 3. Direction of international retail expansion from western to eastern cultures Retail Internationalization (Dawn, 2003) 1. Retail capital: production and consumption ww. a. Stability - a lot of fluidity in considerations b. Consolidation -adjust to new cond. c. Control - vertical/horizational chn. d. Dominance - using home strategy to rule China Frontier for TNC 1. Wang (2003): bypass regulatory barriers and West had more advance information technology in so cultural distance less important factor 2. WTO (Dec.2001): eliminate trade barriers Examining post-WTO China in foreign 1. Analyze market penetration + TNC performance retailers 2. Examine corp. strategies in different levels of market 3. Myers and Alexander (2007): degree of control more/less attractive a. Govn't stats b. Corp. web c. News reports Benchmarks of consumer market size 1. Population Size (Recent changes in market conditions 2. Per capita income and elimination of unconventional trade *Largest spent on food followed by education, housing, transportation barriers) (1970s: watch, bike, sewing machine) Progression of China Moving into WTO 1. 1992: Opened up markets 2. 1995: restrictions unconventional WTO/GATT and only 11 cities 3. 2001: China into WTO (3 years l8, remove rules) 4. 2004: Allowed wholesale, wholly own retail, in-store and other chn. of retail allowed, povt gov't alllowed to approve future opening/outlets *Annual inspections must pass Sucess of Foreign Retailers 1. Degree of market penetration/level of business performance 2. Major foreign retailers: Western, Japanese, Southeast Asia 3. West : highest penetration in China because of WTO-entry (highest with Walmart and lowest with Makro and Ikea) 4. Japanese: earliest foreign retailers (slower and geographically limited compared to West) 5. Southeast Asia: Capture larger market share than Japanese (esp. trust-mart and RT-mart) Examination of Corporate Strategies 1. Retailer offer competitively superior product by local consumers 2. Retailer develop superior economics across value chain 3. Global retailers execute in local
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