Global Retailing Mncs in China

Retailing Multinational Corporations in China: Strategies, Challenges and Outlook

- A Review from a Supply Chain Management Perspective

1. Introduction Ever since its transition to a market economy in the late 1970s, China has enjoyed rapid economic growth. From 1979 to 2010, China achieved annual gross domestic product (GDP) growth of 9.91, and for 2012, its GDP of $8.358 trillion was surpassed by only two countries/regions: the European Union and the United States1. With a population of 1.351 billion1, and a growing middle class2, retails sales in China are $1 trillion a year by 2011 and growing by around 8% annually3. Understandably, China has been a hot destination for retail MNCs (multinational corporations) seeking for growth outside their matured home markets. The Chinese retail sector was opened to the world only not long ago: the Chinese central government did not allow foreign direct investment (FDI) in retailing until 19924. Nevertheless, many MNCs were ‘early adopters’ when entering the Chinese retail market. Carrefour established its first store in Shanghai in 19955. Walmart opened its first supercentre and Sam’s club in Shenzhen in 19966. Ikea has been sourcing from China from the 1960s, and its first retail store was opened in Shanghai in 19987. These companies brought their world-winning winning business model, strategies and management experiences in China. However after more than a decade, their expansion in China proves to be bumpy and China’s retail market is still highly fragmented. In 2004, the top 20 retailers in China together had a 4.9 percent market share, which increased to only 8.6% in 20098. In the third quarter of 2013, for Chinese retailers in the grocery and general merchandise category, the top five retail groups with the highest market share were: RT-Mart (from Taiwan), Walmart, Carrefour, China Resources Enterprise (from Hong Kong), and Bailian Group (China state-owned). The top of the list, RT-Mart, only had an 8.0% market...