Textbook Notes (368,432)
Canada (161,877)
Geography (186)
GGR252H1 (6)
Chapter 1

GGR252 Chapter 1

4 Pages
Unlock Document

Stephen Swales

CHAPTER 1 – FOREIGN RETAILERS IN CHINA: STORIES OF SUCCESS AND SETBACKS Introduction - Transnational corporations (TNC) o Retail corporations, mostly in Europe and North America, sought to acquire others in order to consolidate resources and markets o Active in mediating produce-consumer relations (e.g., creation of new, and re-configuration of existing, retail spaces to induce consumption) - Retail internationalization o Saturation of home markets o Exploration of foreign markets inAsia and Latin America o Migration of retail capital across national borders o Development of retail spaces in foreign consumer markets o Dawson’s four-phase model  Stability • There is considerable fluidity as the firm familiarizes itself with the new market  Consolidation • The firm adjusts to new conditions, consolidating its position  Control • The firm will attempt to exert control over vertical and horizontal channel relationships  Dominance • Once the retailer becomes established in the new market, mature strategies seeking market dominance are applied o Influenced by firm characteristics (e.g., resource availability and commitment, differential advantages) and external retail environment (e.g., market conditions, consumer affluence, cultural preference, competition, regulation) - China o New frontier for many international businesses o Offers both a massive source of cheap labour and a market of mass consumption o Largest emerging market in the world of 1.3 billion consumers Recent Changes in Market Conditions and Elimination of Unconventional Trade Barriers - Two benchmark indicators of consumer market size o Population size o Per capita income - Foreign retailers entered China in 1992 to experiment, but their first stores did not open until 1995 o Chinese government confined the experiment to 11 cities in the east coastal region o China was admitted to the WTO in 2001  China was required to remove all remaining trade barriers and open its retail market completely within three years o China shifted to regulating foreign retailers by legal means (e.g., planning legislations)  Future retail establishments must conform to municipal plans and local land use bylaws  Land use rights must be publicly bid on  Large facilities that are 10,000 m or more must go through a public hearing process  Foreign-invested enterprises must accept and pass annual inspections with audited financial reports Market Penetration and Performance of Foreign Retailers - Two indicators of success of foreign retailers o Degree of market penetration  Number of stores  Geographic distribution = a wider geographic distribution indicates success over local protectionism and cultural barriers o Level of business performance  Total sales, but retailers with high sales volumes may not yet be profitable  Profit levels, but not readily available - Three groups of major foreign retailers o Western retailers (include both North American and European retailers)  Achieved higher levels of market penetration in China than other foreign retailers  Market penetration has taken place in two directions simultaneously • From the eastern coastal region to the western interior • From large urban centres (mainly provincial capitals) to second and third-tier cities  E.g., Wal-Mart, Carrefour, Metro, Auchan, B&Q have high market penetration  E.g., Ikea, Makro have limited market penetration  High total sales, but only higher per store sales than SoutheastAsian retailers o Japanese retailers  Among the earliest foreign entrants to China’s retail market  Expansion has been much slower and geographically limited  E.g., Jusco, Isetan, Iro Yokado, SOGO, Daiei, Lawson  Low total sales, but highest per store sales o Southeast Asian retailers  Have been able to capture a much larger market share in China than the Japanese retailers  E.g., Trust-Mart, RT-Mart, Hymart-Hymall, Lotus, E-Mart are all hypermarket operators  High total sales, but lowest per store sales Examination of Corporate Strategies - Every growth strategy must be built on the following pillars in order to maintain a competitive edge: o The retailer must offer a competitively superior produc
More Less

Related notes for GGR252H1

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.