One of the omnipresent questions pondered by big business over the last decade or so is how to get into the Asian, or more specifically the Chinese, markets. With its 1.3 billion people and 800 million workers; a median age of around 32; and a GDP and industrial output consistently defying gravity, just about everyone wants a piece of the Chinese action.
But many have had their fingers burnt trying to get a grip on the economic dragon that is Asia. From overpowering and rather mysterious bureaucracy and regulations, to deep cultural ravines or just plain ignorance of actual market conditions and consumer trends, the pitfalls are many on the way to a firm presence on Asian supermarket shelves.
Yet world number two retailer Carrefour seems to have, except in Hong Kong and Japan, made it through to the good side of profit in Asia. At the period in time when this case focuses - end 2003 - Carrefour won 50% of its sales at the international checkout in 29 countries. Compare this with world number one retailer Wal-Mart who got just 16% of their sales outside of home's shopping aisles and had a presence in only 11 other countries.
This excellent case study written by INSEAD Research Associate Claudia Gehlen, under the supervision of Affiliate Professor of Strategy & Technology Management, Neil Jones and Emeritus Professor of Strategy and Asian Business, Philippe Lasserre, delivers an overview of the strategies deployed by Carrefour to open stores and win customers in Taiwan, Malaysia, China, South Korea, Hong Kong, Thailand, Singapore, Indonesia and Japan.
So how did Carrefour come to the conclusion that it was indeed the right time and right place to break into a new market? Did they adjust policy and offering across countries to meet local customer needs and cultural nuance? Where were the glitches and how did Carrefour address them? How did the Carrefour name itself impact the Chinese market?
In Taiwan, Carrefour needed nearly 2 years to set up their first hypermarket... why? What impact did regulatory and local partnerships have on their Thailand business? How did Carrefour leverage the Asian crisis in Indonesia? How did they address state-controlled dietary constraints in Malaysia? How did Carrefour get into the Singapore arena? What happened to Carrefour in Hong-Kong after a seemingly bright start? Why did Carrefour enter into partnership with a leading South Korean newspaper? This case provides a great one-stop-shop to the Asian business experience over a fifteen-year period, covering implementation and market strategies, market research, branding, culture and regulatory issues.
An added bonus is the detailed review of Carrefour's foray into the Chinese market with a first store opening in Shanghai during 1995. The trials and tribulations have been many and long lasting with unstable regulatory rules forcing Carrefour to change its local set-up and ownership more than once. But Carrefour seems well on its way to meet its 70-hypermarket target and is today favourably placed in relation to main competitor Wal-Mart who to date have not yet reached an all-round profit scenario in Asia.
A must-read for all who have already tried, are presently trying or are thinking of trying, to enter and succeed in the Asian market-space, with whatever product or service it may be.
Follow the links below to read more about Carrefour.