Carrefour Strategies in China

BSTR/246
IBS Center for Management Research
Carrefour’s Strategies in China

This case was written by Indu P, under the direction of Vivek Gupta, IBS Center for Management Research. It was compiled
from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or
ineffective handling of a management situation.
This case won the second runner up prize in the 2006 John Molson Case Writing Competition, organized by John Molson School of
Business, Concordia University, Montreal, Canada.
S P Jain School of Global Management

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BSTR/246

“Carrefour has gotten it right in China — and, in fact, they’re doing mass retailing globally much
more successfully than the iconic Wal-Mart, earning twice Wal-Mart’s revenue. What Carrefour is
doing right (in additional to grabbing and building as many retail outlets as it can in the big cities)
is simple: They’re selling in a Chinese way to Chinese consumers. You can pull your own seafood
from tanks. You can select from bins of fresh produce. It’s more like a Shanghai outdoor market
than a Paris indoor one. That’s the customer experience the Chinese consumer wants.”1
- Paul K. Ward2, CRM Consultant, in 2005.
“China represents a huge market when it has acquired its WTO membership. But it’s no easy way
to stand out a winner here. China is nearly as big as Europe and each area differs from any other.
We have to keep on learning something new. We must know customers’ wishes and expectations,
therefore offering them more added values.”3
- Jean-Luc Chéreau, Chairman, Carrefour China, in 2004.
THE ‘GREAT MALL’ OF CHINA
In 2006, France-based Carrefour Group (Carrefour), the second largest retailer in the world,
successfully completed eleven years of its operations in China (Refer to Exhibit I for the top 25
food retailers in the world in 2005). As of September 2006, Carrefour operated in China through
its 80 hypermarkets4 and around 250 hard discount stores5. China was Carrefour‟s sixth largest
market, with sales of over €6 2.06 billion in 2005 (Refer to Table I for the top six markets of
Carrefour).
Being one of the first foreign companies to enter the Chinese retail industry, Carrefour played
a major role in bringing about a retail revolution in the country. It leveraged on its experience
in the international markets and introduced a few of its global best practices into the Chinese
market. Carrefour had adopted a decentralized management structure, where al l store
managers in China operated stores with complete freedom. Carrefour sold private label
products and designed the stores according to the convenience of Chinese customers. By
procuring the majority of its products locally, Carrefour was able to ensur e their freshness, an
attribute considered important by Chinese consumers. In China, where vast economic, social,
and cultural differences existed among different provinces, Carrefour was able to cater to the
needs of different customers successfully.
1
Paul K. Ward, “Goofing up Global CRM,” www.crm2day.com, September 06, 2005.
2
Paul K. Ward is known for his work in the area of CRM, Perceived Customer Value, branding and
strategy in China.
3
“No Easy Way to Win in China: Carrefour,” People‟s Daily Online, March 31, 2004.
4
Carrefour‟s hypermarkets occupied floor space between 5,000 sq meters and 20,000 sq meters. They
offered more than 70,000 food and non-food products like household products, medicines, and clothes.
5
Hard discount stores occupied area between 200 and 800 sq meters and sold a range of 800 food
products. Carrefour‟s hard discount stores were named Dia, Ed, and Minipreco.
6
As of October 24, 2006, 1 Euro = US$ 1.254.
1
Table I
Carrefour – Top Six Markets (2005)
Country Revenue (In € million)
France 44,468
Spain 13,619
Italy 7,320
Belgium 5,285
Brazil 3,944
China 2,064
Source: Carrefour Annual Report, 2005.
Till the 1980s, the retail industry in China was fully controlled by the Government.
The department stores run by the Government provided little in the way of conveniences.
According to Wang Zhirong, General Manager of Tian Bai department store in Dalian, concepts
like customer service and choice were unheard of. She said, “It didn‟t matter how you did your
job, when customers came they had to wait until the shop assistants were in a good mood before
begging them for help.”7
Carrefour entered China in 1995, when the Chinese Government had partially opened the retail
sector. The country‟s economy was in the growth phase and the urban consumers were shifting
their preferences from the wet markets8 and state-owned stores, to foreign retailers like Carrefour
which provided convenience along with a wide range of products in hygienic surroundings (Refer
to Exhibit II for retail industry in China). Carrefour went on to strengthen its position in the
country and by 2005; it had emerged as the sixth largest retailer in China. It was also the largest
foreign retailer in the country (Refer to Table II for the leading retailers in China in 2005).
Table II
China’s Leading Retailers (December 2005)
Retailer Sales (RMB Billion) No. of Stores
Bailian Group 72.1 6,345
Gome 49.8 537
Suning 39.7 363
Vanguard 32.0 2,133
Wumart 19.1 659
Carrefour 17.4 70
China Paradise 15.2 225
Trust-Mart 13.2 96
Parkson China 11.0 36
Lotus 10.1 61
Wal-Mart China 9.9 60
B&Q China 5.2 48
Source: China Chain Store & Franchise Association and www.carrefour.com.
7
Rebecca MacKinnon, “China‟s Reforms Produce Winners, but More Losers,” www.cnn.com, October 1999.
8
In China, wet markets can be found all across the country. These markets sell fresh fish, chicken, and live
mammals and reptiles, generally in an open environment.
2
According to Beijing-based CTR Market Research9, Carrefour was the major retailer in 15 of the
largest cities across China, with a market share of more than 5%. Between 2006 and 2010,
Carrefour projected revenue growth of above 20% in China per annum and planned to open about
80 more hypermarkets in the country by 2009. Commenting on Carrefour‟s success in China, Los
Angeles Times reported, “By joining with Chinese partners, adapting to local culture, and
employing a supply chain that includes 18-wheel trucks and three-wheel bicycles, Carrefour has
become the biggest foreign retailer operating in China.”10
BACKGROUND NOTE
In the early 1950s, the grocery industry in France consisted mostly of family-owned stores.
Though there were some big department stores, these charged exorbitant prices. At that time, the
concept of free service11 was gaining popularity and there were very few stores in France that were
providing such services. In 1959, two entrepreneurs, Marcel Fournier (Fournier) and Louis
Defforey (Defforey) from Annecy in Eastern France decided to establish a large discount
supermarket. Initially, they offered 7,000 shares to 10 stockholders and purchased a facility that
was under construction.
On the ground floor of the building, the duo started constructing a supermarket. They sold the
upper floors, thereby obtaining the required capital to run the business. Fournier was the President
of the venture and Defforey‟s son Denis was the General Director. Fournier decided to name the
venture Carrefour (Crossroads), as the store was located at the convergence of five roads in
Annecy. At that time, another businessman announced his intentions of opening a similar store in
Annecy. Fournier and Defforey decided to open a store at other premises as their facility was still
under construction. Fournier used the basement of his office to open a store in January 1960. As
the threat of competition was looming large, the duo offered products at the lowest prices. Soon,
the store became very popular among customers.
Before the new store at Annecy was opened in June 1960, a campaign was launched to familiarize
customers with the concept of supermarkets. The campaign was highly successful and in the first
two days, Carrefour attracted more than 15,000 customers. To accommodate the vehicles of the
customers, Carrefour expanded the parking lot, but this was not enough to cater to the growing
number of visitors. Several traffic jams were reported in the store‟s vicinity and the founders
concluded that locating supermarkets in the congested urban areas was not practical and decided to
move to the suburbs. The next supermarket that was opened was also in the Annecy region in
Cran-Gevrier. It had a large parking lot and a discount service station that sold petrol on a no-
profit, no-loss basis.
In 1962, Carrefour decided to open a store at Sainte-Genevieve des Bois, a Paris suburb 30 km
away from the main city where land was easily available at low prices. Before the store was
constructed, Defforey and his brother went to the US to observe the retail practices prevalent there.
After observing the huge stores, the discounts offered, the low prices and services that the
customers were provided with, they decided to adopt similar practices in France. In 1963, they
opened a new store. It occupied an area of 2,500 square meters and had enough space to park more
than 400 cars. The store provided a wide range of items, including grocery at discounted price,
stocked items like clothing, sporting equipment, electronic goods, and auto accessories. The store
9
Founded in 1995, CTR Market Research is the leading market research company in China. CTR provides
different services that include interpretation of information, market segmentation, advertising, media
research, and business research.
10
Don Lee, “A Chinese Lesson for Big Retailers,” Los Angeles Times, July 02, 2006.
11
Prior to the advent of free service, the sales clerks picked up the necessary items for consumers from the
shelves. Under free service, the customers were given shopping carts or baskets, which they used to
collect the individually priced items placed on the shelves on their own.
3
was inaugurated in June 1963 and its huge size earned it the name „hypermarket‟ in the media.
Carrefour offered products at the lowest prices as compared to its competitors by negotiating well
with wholesalers and suppliers. The concept of a hypermarket found instant acceptance among the
younger people, suburban dwellers, and price conscious consumers.
In 1965, Carrefour formed two divisions – Carrefour Supermarché led by Fournier and Denis and
Grands Magasins Carrefour, headed by Defforey and Fournier‟s son. Carrefour continued its
expansion, opening huge stores in France. In 1966, a 10,000 sq. meters hypermarket was opened in
Lyon and a 20,000 sq. meters hypermarket was opened in Vitrolles. In 1967, Carrefour opened an
office in Paris to coordinate the activities of its different stores. In 1970, the company‟s shares
were listed on the Paris stock exchange. By 1971, Carrefour operated 16 wholly owned stores in
France, had an equity interest in five stores, and also operated seven stores through its franchises.
GOING GLOBAL
Carrefour started making efforts to enter international markets after a law was passed in France in
1963 to restrict the development of large stores. For international expansion, Carrefour adopted the
route of forming alliances with local partners. Its first international venture was in Belgium, where
it opened an outlet in association with Delhaize Fréres-Le-Lion12, in 1969. Carrefour expanded its
operations outside Europe by opening a hypermarket in Brazil in 1975.
In 1978, Carrefour developed a hard discount store format, under the banner Ed in France (Refer to
Exhibit III for different banners of Carrefour). The store offered a limited range of products at very
low prices. By 1985, Carrefour was operating in ten countries and had introduced private label
products that were priced 10-20% lower than the branded products and were of superior quality. In
1988, Carrefour entered the US market by opening a 330,000 sq. feet hypermarket in Philadelphia.
Another hypermarket in the country was set up in 199113. In 1992, Carrefour reported sales of €
17.86 billion and a net income of € 271 million.
In the early 1990s, Carrefour concentrated on establishing larger stores (area greater than 2,500 sq.
meters) and sold off the smaller stores. In 1996, a law was passed in France under which food
wholesalers were not allowed to give any extra discount to supermarkets14 and hypermarkets. They
were to charge an equal price from all retailers. Due to this, the advantage the bigger stores had in
terms of cost was lost and the price of the products was uniform across different types of stores.
The legislation was passed with the aim of protecting the small retailers from the onslaught of
supermarkets and hypermarkets, which got a higher discount from the wholesalers and offered
products at a lower price. The legislation led to the growth of discount chains that stocked private
label brands. The chains started providing products at prices much lower than those at Carrefour.
By then, Carrefour‟s European operations were spread across Austria, Britain, Switzerland, The
Netherlands, Germany, Italy, Belgium, and Spain. Ed was operating in Britain and Italy.
Carrefour‟s South American markets were doing well and the company was aggressively
expanding into those markets. In 1996, Carrefour opened 30 hypermarkets across the world, of
which 15 were in Argentina, Brazil, and Mexico. By 1997, the number of stores in South America
had increased to 60.
12
Delhaize Fréres-Le-Lion is a part of The Delhaize Group, a food retailer headquartered in Belgium.
Founded in 1867, the group operates food supermarkets in North America, Europe, and Southeast Asia.
As of December 2005, the group operated 2,636 stores. It recorded sales of € 364.9 million and profit of
€ 18.6 million.
13
Subsequently, Carrefour suspended the US operations in 1993, as the stores were not profitable.
14
The supermarkets were between 1,000 and 2,000 sq. meters in area and offered mostly food products and
household merchandise at competitive prices. Carrefour‟s supermarkets were called Champion, GS
Norte, Gb, and Marinopoulos.
4
Some of the acquisitions made in the late 1990s helped Carrefour in becoming the top retailer in
Europe. In 1998, Carrefour acquired Comptoirs Modernes SA, which brought 790 supermarkets
into Carrefour‟s fold. In 1999, Carrefour acquired Promodès SA15, which owned several
hypermarkets, supermarkets, convenience stores, and discount stores in France and other European
countries. This acquisition made Carrefour the second largest retailer in the world.
By December 2005, Carrefour was operating in 29 countries with 12,028 stores (including
franchisees and partners) and employed 436,000 people (Refer to Exhibit IV for Carrefour‟s
consolidated store network excluding partners as of December 2005 and to Exhibit V for sales per
store format and region). For the financial year ending December 2005, Carrefour generated
revenues of € 74.49 billion and net income of € 1.58 billion (Refer to Table III for financial
summary of Carrefour for the financial years 2004 and 2005).
Table III
Financial Summary of Carrefour
(In € million)
2005 2004
Net Sales 74496.8 72668.0
Other Income 1011.3 1038.6
Total Revenue 75508.1 73706.6
Cost of Sales (58626.5) (57052.8)
Margin of current activities 16881.6 16653.8
SG&A (12232.7) (11888.2)
Activity contribution before depreciation & provisions 4648.9 4765.6
Depreciation & Provisions 1474.2 1494.7
Activity contribution 3174.7 3270.9
Non-current income & expenses (20.4) (76.0)
EBIT 3154.3 3194.9
Net debt and other expenses (454.6) (484.5)
Income before tax 2699.6 2710.4
Income tax (793.9) (805.9)
Net income from recurring operations 1905.7 1904.5
Total net income 1582.1 1859.6
Source: www.carrefour.com.
CARREFOUR IN ASIA
During the late 1980s, the economy of several Asian countries like Taiwan, Singapore, South
Korea, Thailand etc. was rapidly growing. In order to reap the benefits of this growth, Carrefour
started its Asian operations by entering Taiwan in 1989. It established a joint venture with Uni
15
Established in 1950, Promodès SA played a major role in promoting supermarkets in France. During the
1960s and 1970s, Promodès expanded its operations into other countries in Europe and South America.
5
President Enterprises Corporation16. Initially, Carrefour aimed at building a hypermarket of 10,000

square meters, similar to its hypermarkets in France. On studying the Taiwanese market, Carrefour
realized that the store format which had been successful in other parts of the world would not be
successful in Asia as the Asian retail markets were different from the other markets, in terms of the
layout of the stores, the products offered, the frequency of shopping, and highly price sensitive
customers. Carrefour decided to adapt the stores, the products, and management culture to suit the
local environment.
Carrefour changed its strategy of building the hypermarkets in large open urban lands and began
operating in high density urban areas in pre-existing buildings, when it found that the consumers in
Asia did not wish to travel long distances to purchase groceries and other items as they shopped
frequently and in small quantities. The first store in Taiwan was located in Kaohsiung and
occupied an area of around 3,500 sq. meters. The number of products offered was limited and
Carrefour concentrated on selling high volumes at competitive prices. Tapping the Taiwanese
market was a big challenge for Carrefour as the tastes of the people in the country changed rapidly.
The best selling products in a typical Taiwanese store changed within a span of just six months. In
order to assess the trends, Carrefour opened pilot departments in the stores, where new products
were tested. These departments interviewed some of the customers and studied their purchasing
habits to monitor the changing customer preferences. The information was later communicated to
all their other stores in the country.
Local store managers and department heads were given more autonomy. The department heads
were made responsible for the hiring of staff, procurement, product selection, and vendor
management. They were responsible for achieving the budgeted sales and maintaining profit
margins. In the initial years, senior executives from France were made department heads. Later,
local employees were trained and promoted to assume higher responsibilities.
Carrefour leveraged upon the experience it had gathered in Taiwan to expand into other Asian
markets. The next destination was Malaysia, followed by China (Refer to Table IV for details of
Carrefour‟s entry into Asian countries). Carrefour‟s Taiwanese experience acted as a prelude to its
Chinese venture. The hypermarkets that Carrefour opened initially in China were similar to the
ones that existed in Taiwan. According to Eric Deliers (Deliers), Regional Manager, Carrefour
China, “Our Taiwanese experience was very important. It was Carrefour‟s laboratory not only for
China but for all Asia.”17
ENTRY AND EXPANSION IN CHINA
Carrefour identified China as one of the most important foreign markets, after the country partially
opened its retail sector for foreign investments in 1992. Carrefour entered China in 1995 by
forming a joint venture with the Chinese management consulting firm Zhong Chuang, and
established a firm called „Jia Chuang‟, in which it held the majority of shares. During that time,
consultancy firms in China were not allowed to invest in any other businesses so Zhong Chuang
set up another company, Chuang Yi Jia as a commercial enterprise. The joint venture company,
„Jia Chuang‟ managed the hypermarket that was opened in Shanghai, in a residential area, to cater
to the needs of the middle class in the city. The hypermarket was named Chuang Yi Jia. As
Carrefour had a major say in running and managing the store, the signboards had the name
„Carrefour‟ displayed on them. The next store was opened near the International Exhibition
Center, in the north-east part of Beijing, one of the prominent localities in the city.
16
Uni President Enterprises Corporation is one of the leading business conglomerates in Taiwan and the
largest food retailer.
17
Hayet Sellami, “Carrefour China: A Local Market,” www.cityweekend.com, April 28, 2005.
6
Table IV
Carrefour – Entry into Asia
Country Year of Entry

Taiwan 1989
Malaysia 1994
China 1995
South Korea* 1996
Thailand 1996
Singapore 1997
Indonesia 1998
Japan* 2000
*Carrefour exited Japan in 2005 and South Korea in 2006.
In China, as per the guidelines issued by the State Council, in the retail industry, Sino-foreign joint
ventures were allowed to operate only at a few locations. As per the next set of guidelines issued in
1999, the foreign retail joint ventures were allowed to operate in more cities. Some of the
conditions stipulated were that the joint ventures should be approved by the Central Government,
and that only three outlets could be opened in each of the approved cities (Refer to Exhibit VI for
Regulations of the Retail Industry in China).
Instead of approaching the Central Government of China for approval, Carrefour entered into
direct deals with the local governments of various provinces and convinced them that it would
create employment opportunities18 in their region, generate taxes for the government, and help in
the overall development of the region. The local government officials were quick to grant
Carrefour the required approvals. By 2000, Carrefour had established hypermarkets in Shanghai,
Beijing, Chongquing, Qingdao, Shenyang, and Wuhan.
Carrefour expanded its operations in China rapidly and by early 2001, it had 27 hypermarkets in
12 cities across the country, some of which were fully owned by the company. At that time,
Carrefour was the third largest retailer and also the largest foreign retailer in China. Though
foreign retailers were allowed to open only three outlets per city, Carrefour managed to open more
than three outlets in several cities with the approval of local authorities.
But there was trouble brewing for Carrefour. In early 2001, a cabinet level body, the State
Economic and Trade Commission (SETC), carried out an investigation into Carrefour‟s entry and
expansion in China, after receiving complaints from its competitors. It was widely reported in the
Chinese media that Carrefour had flouted Government stipulations regarding the ownership stake
in retail joint ventures and the number of stores in each city. During the course of investigation, it
was found that in some of the stores, Carrefour owned a 100% stake. The Commission ordered
Carrefour to suspend further expansion in the country, in order to regularize its position according
to the Chinese retail industry regulations.
18
Each store employed about 500 people at different levels including the store manager, department heads,
and store management staff.
7
During the investigation, it was found that Carrefour had opened stores at locations that the Central
Government had not opened up for foreign investments19. Industry analysts opined that Carrefour
had deliberately flouted the rules and set up stores without approval from the Central Government.
They felt that the company‟s management was of the view that once its operations had spread
widely across the country, Carrefour would be among the major employers and tax payers, a fact
which would force the Central Government to subsequently grant the required approvals.
This episode led to the then CEO and Chairman of Carrefour, Daniel Bernand, tendering a public
apology during his visit to China in March 2001. On the bureaucracy in China, Chief Economist of
Retail Forward Inc.20 pointed out, “They can overlook rules and then suddenly decide to enforce
them. That happened with Carrefour recently.”21
By November 2001, Carrefour announced that the differences with the Chinese Government had
been resolved and that the SETC had allowed the company to continue expanding its activities. As
per the agreement reached with the SETC, Carrefour agreed to set up 10 procurement centers
across the country, to procure Chinese goods which would be sold through its stores all over the
world. Carrefour also admitted local partners and all its stores in the country were 35% owned by
the local partners with the remaining held by the company. According to Jean-Luc Chéreau
(Chéreau), Chairman, Carrefour China, “Sometimes we may have problems in understanding
Chinese laws and regulations. But we always respond positively to the government‟s requirements
when problems arise, by rectifying our operation to make sure that the law is fully observed.”22
In April 2002, SETC and Carrefour reached the final agreement, according to which the number of
holding companies was to be reduced to 13. Earlier, Carrefour had 27 holding companies, one for
each store. After the agreement, Carrefour formed one holding company for each of the 13 local
partners (Refer to Table V for some of Carrefour‟s partners in China). In June 2002, Carrefour
transferred 35% of its ownership in three hypermarkets to two local firms – Chengda and Harbin
Dongli Equipment Company.
Carrefour opened its 28th Chinese store in Hangzhou, Capital of Zhejiang province, in June 2002
and by the end of 2002, its sales in the country had increased to € 1.19 billion as compared to €
1.18 billion in 2001. By then, the number of hypermarkets had increased to 30, with four
hypermarkets in Beijing and six in Shanghai.
By 2003, Carrefour had a presence in 15 cities and its sales had reached to € 1.32 billion. In 2003,
Carrefour opened its first hard discount store, Dia, in China by entering into a joint venture
agreement with Shanghai Lianhua Supermarket23. They planned to open 300 discount stores in
different residential areas in Shanghai by the year 2007. The joint venture was set up with total
capital investment of RMB24 90 million. The goods sold through the discount stores were to be
priced 10-15% lower than the goods sold through the hypermarkets. These stores were targeted at
low and middle income customers and stocked only 1,500 varieties of goods as against the 35,000
varieties stocked by a typical hypermarket.
19
According to China‟s WTO commitments in 2001, foreign retailers were allowed to establish joint ventures in
five economic zones and six Chinese cities. In the next year, all provincial capitals were to be opened up to
foreign investors and in the third year, the limitations regarding investments were to be lifted.
20
Retail Forward Inc. is a Columbus, Ohio, based firm that focuses on management consultancy services,
market research, and executive development.
21
Jenny Summerour, “The China Connection,” Progressive Grocer, January 01, 2002.
22
“No Easy Way to Win in China: Carrefour,” People‟s Daily Online, March 31, 2004.
23
Owned by the Bailian Group and controlled by the Shanghai City Government, Shanghai Lianhua
supermarket is the largest retailer in China. Established in 1991, it operated through different store
formats including hypermarkets, supermarkets, convenience stores, chain drug stores, and e-business
stores. In 2003, Shanghai Lianhua and Shanghai Hualian merged to form the Bailian Group.
24
RMB (Renminbi) is the Chinese currency; it means people‟s money. The unit of Renminbi is a yuan &
with smaller denomination called jiao and fen. The conversion among the three is 1 yuan = 10 jiao = 100
fen. The currency exchange rate as on October 24, 2006 was 1 US$ = 7.89 RMB
8
Table V
Carrefour – Partners in China
Year City Partner

1998 Wuhan Hanshang Group
2000 Shanghai LianHua
2002 Kunmig Kunmig Department Store Co.
2002 Xi‟an Jin Hua Group
2002 Guangzhou Guangzhou Department Store Co.
2002 Liaoning Liaoning Chen Da
2002 Harbin Harbin Dong Li
2002 Tianjin Tianjin Quan Ye
Source: Jean Kinsey, Min Xue, “Supermarket Development in China,” Globalization, China and the
Industry Studies Program, Solan Workshop, MPI Worcester Polytechnic Institute, June 16-17, 2005.
In 2004, Carrefour introduced the Champion Supermarket format in China, in association with a
local partner The Beijing Shoulian Group25. By 2005, there were eight Champion supermarkets
spread across the country. These stores were different from hypermarkets and were located in
residential areas. According to Philippe Pauze, President, Champion Supermarket, “Champion
supermarkets are specifically engaged in providing various fresh foods, including vegetables,
fruits, meat, seafood, and snacks to the customers, so our chain stores are all set up in residential
communities.”26
In 2004, Carrefour recorded total sales of € 1.62 billion. During the year, Carrefour opened 21 new
hypermarkets and total hypermarkets in China increased to 62. By the end of 2004, the restrictions
on the number of outlets that foreign retailers could operate per city were lifted and the foreign
retailers were allowed to have 100% ownership. The Chinese Government also announced that the
remaining restrictions in the retail sector would be removed by the end of the year 2007.
In late 2005, Carrefour had stepped up efforts to acquire complete ownership of its Chinese stores.
It bought the remaining stake owned by most of the local joint venture partners in its stores.
Between 2004 and 2005, Carrefour‟s revenues in China grew by 25% and it remained the largest
foreign retailer in the country.
In the first half of 2006, Carrefour generated sales of € 1.26 billion in China, a growth of 28.1% as
compared to the first half of 2005. As of May 2006, Carrefour had opened 230 Dia outlets in
China. The number of hypermarkets had grown to 79 by July 2006 (Refer to Exhibit VII for
Carrefour‟s hypermarkets in China as of September 2006).
THE STRATEGIES
While most of the global retailers and consumer product companies considered China to be a
single huge market, Carrefour adopted a different approach. It considered the country to be
comprised of several small markets. The company approached these markets with flexible
procurement, store management, marketing, and service strategies. According to Chéreau, “China
does not have an easy market, the country is more like a continent where the variety of cultures
25
The Beijing Shoulian Group is an enterprise group with more than 10 retailers. It is a state owned
company engaged in logistics and department store operations.
26
“French Firm Opens First Asian Store in Beijing,” People‟s Daily Online, June 25, 2004.
9
and traditions set up challenges for us in how to adapt our concept to each area. We have to deal
with strong differences between cities and provinces, and with different institutional levels in the
country. However, it is a fantastic challenge to adapt our concept to each area of the country.”27
Since the initial years of its operations in China, Carrefour concentrated on keeping the prices low,
keeping in mind the fact that for Chinese consumers, price was the main consideration. This made
Carrefour‟s hypermarkets very popular among the Chinese consumers. Even when the first outlet
was opened in Shanghai, the managers were confident that their prices were lower than the prices
charged by any other store in the city.
Carrefour sold a wide variety of goods, which attracted consumers to the stores. Convenience was
another factor that the company promoted. The Chinese consumers had to visit several places like wet
markets for purchasing fish, grain markets to pick up grocery items, and small specialty stores to obtain
other items.28 Carrefour provided the convenience of obtaining all these items under one roof.
The basket size in the Chinese stores of Carrefour was much smaller than that in the European
stores, as Chinese consumers bought in small quantities, several times a week. They also liked to
test new products by buying in small quantities, before they made bulk purchases. Daily shopping
for fresh foods was widely prevalent in China, especially during summer.
OPENING NEW STORES
Carrefour planned the expansion of its operations in China in a systematic manner by establishing
regional offices. For instance, the headquarters of the East China region in Shanghai took care of
expansion activities in that region. The headquarters of the Northwestern region was located in
Xinjiang and it was responsible for expanding business in that region.
Carrefour chose the store location based on the available space and the purchasing power of the
people in that location. Before opening new stores, it sent a team to conduct a detailed study of the
store location followed by a study on the culture, customs, and traditions of that region. As a part
of the study, the team also assessed the purchasing potential of the local people and assessed their
purchasing habits. Carrefour was careful in choosing the locations and opened stores in highly
populated areas.
Few consumers in China owned cars and they went to stores either on bicycles or by public
transport. Therefore, unlike in the western countries, where the stores were located on the city
outskirts, most of the Carrefour stores were located at the center of the city with easy access to
public transport.
As Carrefour expanded its operations into smaller Chinese cities, the capital investment in stores
was comparatively lower as the stores were smaller. The volume of goods at these stores was less
and they were in small assortments. Carrefour did not follow a particular store format and
encouraged the local store managers to come out with the best format for the store and sales plans
to ensure that the store broke even within two to three years.
In early 2006, Carrefour decided to explore the potential for establishing hypermarkets in major
shopping malls. Carrefour initially explored the opportunities in Shanghai and opened three outlets
by January 2006. These hypermarkets were located in the Nanfang Shopping Center in Minhang
District, the Lianyang Thumb Square in Pudong New Area, and in the Dragon City shopping mall
in Minhang District‟s Qibao area. Commenting on this strategy, Wang Xiaozhong, Corporate
Communications Manager of Carrefour, said, “The shopping mall has many resources including
stores, counters, and restaurants that will attract many more customers than if we opened an
independent store somewhere. Since opportunities to locate stores in the downtown are getting
scarce as the city becomes more crowded, we‟d like to make use of big shopping malls and their
adjoining neighborhoods in suburban areas.”29
27
28
The Chinese meal consisted of carbohydrate rich products like rice, noodles, and steamed buns accompanied
by dishes made of vegetables, meat, or fish. The meal usually ended with fresh fruits or a sweet.
29
“Carrefour Focuses Growth on Mall-based Retail Outlets,” Shanghai Daily News, January 20, 2006.
10
STORE MANAGEMENT
As a part of its global strategy, Carrefour had decentralized its operations, giving full freedom to
store managers to operate their stores. Decentralization was one of the important factors for
Carrefour‟s success in international markets, with store managers being empowered to take
decisions according to the local traditions and customs.
Each store was managed by the store manager and department heads. The store manager allotted a
particular portion of the store to each department head, who was responsible for managing that
portion, including the products stocked, promotions to be carried out, etc. The store manager along
with the department head decided on the product mix for that portion of the store. All personnel of
a particular department reported to the department head. Each store was treated as a profit center.
The store managers decided on the products to be sold in the stores according to the needs and
preferences of the customers. The suppliers had to negotiate prices with each store separately. This
policy was highly useful in China, where centralized supply system and logistics network were not
well developed. As each store was free to procure the required products, the store manager and
department heads procured products that were in high demand at that store. The managers
carefully monitored the shelf space and if the products stacked in the shelves did not generate
enough sales within 45-60 days, they were removed.
The performance of the store managers was judged by their ability to meet the forecasts and profit
targets. The monthly performance of individual stores was communicated to all other store
managers in China. Good performance was rewarded with higher incentives and an increase in
salary.
SUPPLY CHAIN MANAGEMENT
The supply chain system that Carrefour had in China was quite flexible. According to Christophe
De Nays Candau, In-charge of Organization, Systems and Supply Chain in Carrefour, China, “It‟s
(supply chain system) highly fragmented, so we have to keep our flexibility. We still use the bike
if it‟s the lowest cost and most efficient.”30
Carrefour procured most of the goods from within China to cater to its local operations. Since its
initial years of operation in China, about 85% of the stock sold was procured locally. This helped
Carrefour maintain lower prices compared to other foreign retailers, who sold imported products.
Buying and stocking local products was part of Carrefour‟s strategy to cater to the needs of the
local customers. However, the items stacked were also different depending on the location of the
store. Stores that were located in places that had a large expatriate population had more imported
goods, different kinds of European and American food items, and the prices charged were also
higher. The outlets in other locations were designed to cater to the needs of the local Chinese
population and stacked predominantly Chinese products and food items. In order to differentiate
the imported products from the Chinese products, the flag of the country from which the product
had been obtained was displayed on its label.
Carrefour established the global procurement headquarters at Shanghai and the first procurement
center was opened in the southern Chinese province of Guangdong in July 2001. In 2002,
Carrefour set up its global purchasing center in Shanghai, through which goods were sourced
across the country. Through this center, Carrefour procured Chinese products to be sold in the
international markets. The total procurement from China was valued at US$ 1.6 billion in 2002,
US$ 2.15 billion in 2003, and US$ 3.2 billion in 2004. The purchasing centers were located in
Beijing, Guangzhou, Wuhan, Ningbo, and Dalian. By 2006, 11 purchase centers had been
established across the country (Refer to Table VI for the products procured by Carrefour from
China).
30
Don Lee, “A Chinese Lesson for Big Retailers,” Los Angeles Times, July 02, 2006.
11
Carrefour sold its own label of products that were of good quality. As of 2006, there were over
2000 products that Carrefour sold under its own label which included food, grocery, daily
necessities, and clothes. These products were priced 20-40% below the market price of competing
branded products (Refer to Exhibit VIII for the private label products sold by Carrefour in China).
Carrefour faced several supply chain related problems in China owing to its size of operations and
the country‟s underdeveloped logistics infrastructure in some of its store locations (Refer to Exhibit
IX for a note on supply chain and logistics network in China). For instance, it took more than seven
days to cover the distance between Shanghai in the East of China and Urumqi in Western part of the
country by truck. In December 2005, Carrefour had more than 9,000 suppliers who supplied 250,000
different products. On an average, each of Carrefour‟s stores had around 40,000 products. A
distributor with a countrywide network was not present in China. The country had more than four
million transport companies with a combined fleet of around five million trucks.
Table VI
Carrefour – Products Procured from China (2006)
Food/Fresh Products
Grocery, fruits, vegetables, flowers, aquatic products.
Hard Goods
Household ware, kitchen ware, household tools, stationary, outdoor products, car accessories,
luggage, furniture, toys, gifts, sports and fitness products.
Electronics
Kitchen appliances, air conditioners, fans, refrigerators, cameras, audio and video products,
computers.
Textiles
Baby and children wear, home textiles, women‟s wear, men‟s wear, shoes, gloves, ties, other
accessories.
Source: www.sourcing.org.cn.
Vendor relationship was another issue that Carrefour had to deal with, in China. Local suppliers
were not conversant with how to maintain optimum inventory levels. They did not maintain a
standard size for delivering goods, nor a standard as far as product reference or order forms were
concerned; concepts like service levels were unheard of. Carrefour taught the suppliers how to do
business efficiently and provided them with the required support. Many of the suppliers were
provided with computers and software to manage inventory and standardize their products and
orders. Carrefour chose to use the services of local distributors who were well versed with the
local networks. The company was not in favor of building a national network for distribution or an
automated supply chain system in the country. Commenting on the supply chain problems,
Philippe Riou, Executive In-charge, Supply Chain Development, Carrefour China, said, “The
distribution is not mature. The producers are adjusting to the production network and many
companies merge and go into partnerships, making it difficult for us to have a stable source and
very difficult to design a proper, efficient network.”31
Carrefour China Foundation for Food Safety, a Hong Kong-based non-profit foundation, organized
training programs for farmers and other fresh food suppliers in China. The training program, called
Agricultural Products Quality and Safety, was launched in 2005. The farmers and suppliers were
31
Maria Trombly and Betta Plebani, “In China, Complex Supply Chains Yield to Simple Systems,
www.ciocentral.com, November 07, 2005.
12
taught about food safety, health, and hygiene and about preserving the freshness of their products.
Within one year, Carrefour had conducted ten training programs at eight different locations. The
company was of the view that such training would help it in providing the consumers with
products of higher quality and safety.
LOCALIZATION STRATEGIES
Carrefour believed that its stores should reflect the local environment and complement the local
culture. The western style hypermarket was customized by Carrefour to effectively cater to the
needs and preferences of Chinese consumers (Refer to Exhibit X to see a few visuals of a typical
Carrefour hypermarket in China). Most of Carrefour‟s stores in China were spread across several
floors and ramp escalators were provided to move shopping carts between the floors. The sides of
the escalators were stacked with snacks and eatables.
Carrefour stocked products preferred by the local population, in a manner they demanded. In some
of the company‟s stores in China, the department selling fresh food and groceries was designed to
resemble the local outdoor markets. According to Sherry Ding, Analyst with AT Kearney Inc.,
“There are ladies calling out to the customers, saying: „Come here, this is fresh and good,‟ just like
in street markets.”32 For instance, for selling fish, Carrefour adopted different methods. In its stores
near the coastline, consumers preferred live fish so Carrefour sold live fish. In the middle and
western China, away from the coast, consumers preferred frozen fish and this was stocked by the
stores there. In many of the Carrefour stores in China, consumers could buy live fish, turtles, and
meat that was usually not available in Europe. Other products like instant noodles, the most
preferred snack among the Chinese, was sold across all Carrefour stores in the country.
The fresh food section was located at the entrance of the store and products that were available
there were similar to the products available in the other local fresh food markets. However,
Carrefour ensured that these food items were available at lower prices and in a clean environment.
This made customers who purchased fresh food several times a week visit Carrefour regularly.
In a store in Uighur33 populated mostly by Muslims, Carrefour did not sell pork34. All the products
sold at this outlet was certified halal products35. Other local products sold in the store were 20
varieties of raisins, roasted mutton, sausages made of horse meat, and locally popular snow lily
tea. When the store was opened, the store displayed 20 varieties of French wine priced above US$
10. However, not much wine was sold, as it was very expensive going by the Chinese standards.
Carrefour soon replaced these with local wine priced at US$ 1 per bottle.
For important festivals like the Spring, which fell on the 15th day of the first lunar month according
to the Chinese calendar (between January and February), Carrefour decorated its stores according
to traditional practices and stacked the stores with several items like paper lanterns that were used
during the festival. According to one of the shoppers at a Carrefour store in Beijing, “I like to do
my pre-festival shopping in Carrefour. They have got all the stuff from imported cheese to
homegrown fresh fruits and vegetables.”36
32
Carol Matlack, Wendy Zellner, Frederik Balfour, “Carrefour in a Corner,” BusinessWeek Online,
October 11, 2004.
33
Uighur, also known as Xinjiang Uyghur Autonomous Region, is located in the west of China bordering
Tibet, Mongolia, Russia, Russia, Kazakhsthan, Pakistan, and India. Uighur is populated by Uyghurs
(45.21% of the population according to 2000 census) and Kazakhs (6.74% of the population) who are the
Muslim Turkic groups. The number of Han Chinese in the region stood at 40.58% as of 2000.
34
As per Islamic law, the Muslims are forbidden to consume pork.
35
The Arabic word Halal refers to food that is permissible according to the Islamic dietary laws, which
specify the type of food Muslims can consume. The laws also specify the method of slaughtering
animals, and sea food that is permissible to consume.
36
“Foreign Businesses Cash on Chinese Holiday Economy,” www.peopledaily.com.cn, January 20, 2004.
13
Christmas was widely celebrated in China by the retailers, as the Western holidays were also
gaining popularity in the country especially in the urban areas, with several Chinese returning
home from foreign countries. Carrefour displayed a wide variety of Christmas trees and sold
several Christmas goods like Santa Claus toys, hats, items to decorate Christmas trees, etc. at all its
stores.
THE HR PRACTICES
Though Carrefour had expanded its operations all over the world, the organization remained lean
as several of its key functions were decentralized. The headquarters had a staff of only about 20,
with around 10 people involved in the HR function. Between the stores spread all over the world
and the headquarters in France, one tier of regional managers was present. Each of the regional
managers functioned with just around five assistants. The store managers reported to these regional
managers.
Training was an ongoing process all over the world, and Carrefour spent around 2% of its payroll
costs on it. The store managers and department managers were responsible for providing training
to the staff. The best performing stores were asked to share their experiences and best practices
with other stores in the country. The top management of these stores helped other stores to train
the staff, select and display the merchandise, and lay out new business plans.
At Carrefour, all the employees were told that they were responsible for people, assets, money, and
merchandise. Each employee was given a job description that revolved around these areas and the
training programs were designed to fulfill the needs of the job. Performance reviews provided
employees feedback about how they had fared in each area.
In the initial years, the top level management at Carrefour China comprised French people. Their
main task was to infuse Carrefour‟s values, spreading the philosophy of serving customers and
managing the staff of each store. (Refer to Table VII for Carrefour‟s Values). Carrefour chose 25
employees from Taiwan, who were well versed with Carrefour‟s business, to start its Chinese
operations. These employees spoke the local language and were well versed with the local market
conditions and customs. They were instrumental in setting up the initial operations of the company
in China and infusing Carrefour‟s global practices into Chinese operations.
Table VII
Carrefour Values
Freedom: Make consumption more democratic by giving the customer the freedom to purchase
products at prices that correspond to their buying power.
Responsibility: Give all the employees the right to take the initiative and assume responsibility
for actions.
Sharing: Distribute the wealth created among the customers, employees, shareholders, and
suppliers in an equitable manner.
Respect: Listen to, understand, and respect individual cultures, differences, and interests
worldwide.
Integrity: Act with transparency and respect commitments.
Solidarity: Foster solidarity among the women and men in the group and contribute to the
development of the local economy while preserving social equity.
Progress: Encourage innovation and make commitment to a process of continual improvement.
Source: www.csreurope.org.
14
In the year 2000, Carrefour started the „Carrefour China Institute‟ to train the employees in
Carrefour‟s values. In the institute, the first such in Asia, Carrefour provided training to its staff
including store managers. The center was spread over an area of 1,200 square meters and had
conference rooms, training rooms, a computer room, and a restaurant. The employees were trained
in the areas of security, services, cash handling, etc.
For fresh graduates and some of the internal personnel, Carrefour conducted training in three
stages. The training was both theoretical and practical. For the managerial staff, Carrefour
conducted a six-month training consisting of theory and practical training. The trained personnel
were absorbed into the organization as store directors and were equipped to negotiate with local
government officials, suppliers, and vendors.
The Carrefour Elite training was aimed at training managerial level personnel. The training was for
a period of one year and senior officials from Carrefour also participated in it. The participants in
the program were given an opportunity to visit Carrefour Stores in China and also in France. All
the personnel trained in the institute were required to sign a three- to five-year contract to work for
Carrefour.
THE CHALLENGES
Industry analysts opined that customizing its store formats to suit local needs had been Carrefour‟s
main strength and this had helped the company penetrate large and tier II cities in China. Despite
rapid growth, Carrefour‟s share in China was only at around 1.5% of the organized retail market.
According to RNCOS37 market research report 2005, China‟s retail market was valued at around
US$ 756 billion, with organized retail accounting for 20% of the market.
Analysts feared that though the Chinese Government had opened up its retail sector to foreign
retailers, foreign retailers may continue to face regulatory problems in China. It was widely
reported in the Chinese media that the Government was drafting new rules to restrict the expansion
of large foreign retailers. These rules were expected to be announced in December 2006, and were
likely to impede Carrefour‟s growth plans. According to the new rules, foreign retailers would be
asked to file details of their proposed expansion plans and hold public hearings on the impact of
their outlets on the communities. The public hearings that included regulators, industrial
associations, academic experts, competitors, and local residents were widely practiced in North
America and Europe and China was believed to be interested in adopting a similar practice.
According to Robert Gregory, Retail Analyst with M+M Planet Retail38, “The Chinese authorities
seem intent on protecting the local retailers and it is likely that they will continue to give the locals
more favorable treatment in the future – maybe preferential treatment when it comes to store
locations, for example.”39
Apart from regulatory challenges, Carrefour faced several other problems in China. The price of
commercial property, especially in the urban areas in China where Carrefour had a significant
presence, was increasing rapidly. Due to this, the rent and lease costs were growing along with the
marketing and advertising expenses of the company.
Moreover, Carrefour‟s Champion supermarkets in which Carrefour owned a 65% stake (35% was
held by local partner Shoulian) were not able to withstand the onslaught of competition. In April
2006, Carrefour sold its stake in four of its Champion supermarkets to Shoulian and planned to sell
its stake in the remaining four by the end of the year. Carrefour‟s Dia venture also faced problems
and incurred losses in 2006. The local partner – Lianhua – had signed a termination agreement to
exit from the venture.
37
RNCOS is a market research consulting services company that specializes in the pharma, IT, telecom,
retail, and services industries.
38
M+M Planet conducts research on grocery retailers and retail markets. The company maintains a
database of leading grocery retailers along with details of trends and happenings in the industry. The firm
functions from London, Frankfurt, Brussels, and Tokyo.
39
“Chinese Rule Change to Spark Retail Growth,” www.foodanddrinkeurope.com, March 19, 2004.
15
The company‟s procurement policy, under which the individual store managers and department
heads were free to decide on the merchandise to be purchased at their store, was also criticized.
Due to this policy, widespread corruption was reported in several stores of Carrefour in China. For
instance, in April 2006, the Shanghai court imposed a fine of £25,000 on Carrefour for selling fake
Louis Vuitton handbags through its stores. The judge criticized Carrefour‟s purchasing policies
that had allowed counterfeiters to sell their products through the company‟s stores. Three bags
each priced at £3.60 were sold before the stock was removed from the shelves. The official from
Carrefour said, “It is true that fake bags appeared in our store, but we did not intend this to happen.
It is impossible for us to check every product. Perhaps we can only say our staff didn‟t have much
knowledge of luxury products.”40
In June 2006, Carrefour was reported to be selling fake Adidas footballs. In Carrefour‟s
Fangzhuang store in Beijing, fake Adidas footballs were sold at RMB 59.90, while the original
Adidas football that was used for the World cup was priced at RMB 900. This problem was also
attributed to the flaws in Carrefour‟s local procurement policies. In order to address these issues,
Carrefour formed a special investigation team, which conducted surprise checks on the stores and
interacted with the suppliers.
In 2006, consolidation and expansion had become the norm in the Chinese retailing industry. Wu-
Mart41 acquired a 75% stake in MerryMart42 in January 2006. With this acquisition, 100 stores of
Merry Mart in Beijing became a part of Wu-Mart and its share in Beijing‟s supermarket business
increased to 10%. GOME Electrical Appliance Holding Ltd. (GOME)43 acquired China Paradise44
in July 2006, creating a US$ 10 billion retail chain. Other competitors like the Thailand-based
Lotus Supercenter were on an expansion spree. Lotus Supercenter announced plans to increase its
store count in China by 100 in 2006. Several local retail chains like GOME were also expanding at
a tremendous pace, opening one store every thirty hours.
On October 17, 2006, Carrefour‟s global archrival Wal-Mart, announced the acquisition of
Taiwan-based Trust-Mart for US$ 1 billion. Trust-Mart operated through its 108 stores across 20
provinces in China. The company had 30,000 employees in the country. Wal-Mart planned to
acquire Trust-Mart in a phased manner, acquiring 31 stores initially. The other Trust-Mart stores
were to be acquired by Wal-Mart in the next three years.
With this acquisition, Wal-Mart would be able to lay its hands on a wide spread, well-developed
network of stores. Industry analysts opined that the acquisition would also help Wal-Mart in
sprucing up its supply chain. They felt that after this acquisition, Wal-Mart could give a tough
competition to Carrefour in China and would be in a position to challenge leading Chinese retailers
like Bailian Group (Refer to Exhibit XI for Wal-Mart‟s key business strategies in China).
Carrefour was strong only in some regions in China and the competitors were gaining ground in
several other regions (Refer to Exhibit XII for geographical spread of Carrefour‟s operations and
its competitors in China).
40
“Carrefour Admits Selling Fake Louis Vuitton Handbags in China Store,” www.finanznachrichten.de,
April 20, 2004.
41
Wu-Mart is one of largest retail chain store operators in China and is a non state-owned enterprise. It
operates hypermarkets, supermarkets, and convenience stores in several major cities across China.
42
MerryMart Chainstore Development Co. Ltd. is the fourth largest supermarket in Beijing.
43
GOME opened its first retail outlet in China in 1987 and adopted the name GOME in 1993. The company
began its expansion in China in 1999. In 2004, it was recognized as one of the „Key and Strategically
important enterprises‟ by the Ministry of Commerce, China.
44
China Paradise Electronics Retail Ltd., established in 1996, is the leading retailer of household appliances
and consumer electronics products.
16
Notwithstanding these challenges, Carrefour remained positive about its future prospects in China.
According to Patrick Ganaye, General Manager of Carrefour China-East, “Competition is fierce,
but we don‟t view it as bad news as long as we can figure out new ways to attract consumers.”45
Carrefour had several plans to retain customers and attract new customers in China. It planned to
introduce loyalty cards in China by the end of 2006. Another area that Carrefour was looking at
was offering consumer credit for the purchase of home appliances. Carrefour‟s management
appeared to be well aware of the competition it had to face in the Chinese markets. According to
Deliers, “This is not a chess game, where you kill the king at the end. Rather, it is like the game of
Go, where you have to continuously develop a new strategy to expand on the map.” 46
45
“Carrefour Focuses Growth on Mall-Based Retail Outlets,” Shanghai Daily News, January 20, 2006.
46
17
Exhibit I
Top 25 Food Retailers in the World (December 2005)
Rank Company Headquarters Sales (In billion US$) No. of Stores
1 Wal-Mart USA 312.4 6,380
2 Carrefour France 92.7 12,028
3 Tesco UK 69.6 2,365
4 Metro Group Germany 69.3 2,458
5 Kroger USA 60.6 3,726
6 Ahold Netherlands 55.3 6,422
7 Costoco USA 52.9 460
8 Rewe Germany 51.8 11,242
9 Schwarz Group Germany 45.8 7,299
10 Aldi Germany 45.0 7,788
11 Walgreens USA 42.2 4,953
12 Auchan France 41.8 2,686
13 Edeka Germany 41.3 19,001
14 Albertsons USA 40.4 2,541
15 AEON Japan 40.2 10,132
16 Safeway USA 38.4 1,914
17 ITM France 37.7 3,932
18 Leclerc France 35.4 581
19 Seven & I Japan 35.3 21,136
20 Tengelmann Germany 29.8 7,730
21 Sainsbury UK 29.2 808
22 Casino France 28.3 9,388
23 Woolworths Australia 28.0 2,744
24 Coles Myer Australia 27.9 2,755
25 Delhazie Group Belgium 23.1 2,637
Source: www.supermarketnews.com and www.carrefour.com.
18
Exhibit II
Retail Industry in China (2006)
China is among the fastest growing economies in the world with a population of over 1.3 billion.
In recent years, there has been a rapid growth in the disposable incomes of the middle class
population. Their collective spending is estimated to cross US$ 500 billion by 2010. According
to the consulting firm Retail Forward, China was the seventh largest retail market in the world
as of 2005. The top six markets are the US, Japan, the UK, Germany, France, and Italy. By
2008, China was tipped to climb up to the fifth position.
The eastern parts of China are comparatively wealthy and the markets in these regions are well
developed. Even among the well-developed regions, cities like Beijing, Tianjin, Shanghai, and
Guangdong are very well developed and the retail spending by the consumers in these cities is much
higher than the average in the country. According to estimates by research firm IGD, the urban
population of China would reach to 874 million by 2030 from 529 million in 2004 with the influx of
345 million people from rural to urban areas. This would provide vast opportunities for the retailers.
In 2005, retail spending in China stood at US$ 756 billion. The retail sales in 2006 were estimated to
grow by more than 13% to reach US$ 860 billion.47 With an estimated compounded annual growth rate
in the range of 8-10%, the retail sales in China are estimated to grow to US$ 2.4 trillion by 2020. The
growth is estimated to be fueled by increase in income levels across China. According to McKinsey,
the number of households in China with annual earnings between RMB 25,000 and RMB 100,000 is
likely to grow to 200 million by 2015 from 42 million in 2003.
However, organized retailing in China has yet to penetrate several areas. The top 100 chains in
China account for only 10% of the total retail sales. 48 The share of the foreign firms was 23%
when the total sales of top 100 chains in China was considered. The sales of the top 100 retailers
in China in 2005 stood at RMB 707.6 billion49, registering a growth of 42% as compared to
2004. The number of stores operated by the top 100 retailers reached 38,260.
In 2005, the Chinese economy grew by over 8% and the events like the Olympic Games in 2008
and the Shanghai Expo slated for 2010 are expected to further accelerate the economic growth.
These events would have a positive impact on consumer spending, further fueling the growth of
the retail industry.
Supermarket Development in China
Time Period Development Details
Traditional grocery Mainly state owned and collectively operated.
1980s Some are privately owned and operated
Stores
Stores of 300-800 sq. meters, which sold packaged
Emergence of foods and items for daily use were sold. The fresh
Early 1990s
Supermarkets items sold were very few. Chains had fewer than
10 stores
Superstores in area of 20,000 sq. meters, along
Net Store Formats
with hyper markets and convenience stores
Entrance of multinational companies like
Late 1990s Foreign Investment
Carrefour, Wal-Mart, Metro and 7-Eleven
Development was rapid in coastal cities like
Coastal Cities
Shanghai and Shenzhen.
Contd…
47
“Ready for the Warfare in the Aisles,” Economist, August 05, 2006.
48
“Ready for the Warfare in the Aisles,” Economist, August 05, 2006.
49
Zhang Lu, “China Sees Slower Sales Revenue Climb in 2005,” www.chinadaily.com, March 23, 2006.
19
Contd…
European style discounters, warehouse clubs and
More new formats
Minimarts.
Geographic Expansion Retail chain expand outside their home provinces
Wider variety of items, including more fresh
Merchandise Structure produce and organic foods. Emergence of Private-
label store brands
21st Century Chinese supermarket chains merged with both
Mergers
domestic and foreign players
Traditional stores including mom n pop groceries,
Reform of traditional state owned grain and oil shops, and kiosks were
transformed into small supermarkets and
Stores convenience stores. Small independent
supermarkets also emerged.
Adapted from Geping Guo, “Development of Supermarkets in China,” Supermarkets and
Agricultural Development Conference, Shanghai, May 2004. (www.fas.usda.gov).
Compiled from various sources.
20
Exhibit III
Carrefour’s Banners
Banners Description Facts
Champion International supermarket banner opened in 1969 Second largest supermarket
in Bayeux, France. chain in France.
Covers range of household food needs based on 4 Average area is 1,500 square
key aspects: food industry expertise, fresh meters.
produce expertise, discount prices and customer Product ranges Reflets de
rapport. France, Destination Saveurs.
Concept – “the customer is always right” Active in Belgium, Spain,
Mascot – Sporty Poland, Greece and Turkey,
Argentina and Brazil.
Dia Introduced in Spain. Operates in Spain, Greece,
Discount food products retailer offering high- Turkey, Brazil, China, and
quality products at lowest prices. Argentina, Portugal
(Minipreco banner), France
Range of products between 1,600 and 2,000 food, (Ed banner).
personal care and cleaning products.
Ed French hard discount banner introduced in 1978. Selling space ranges
Provides 1,200 product references at low prices between 500 to 1,000 square
and offers convenience shopping. meters.
Concept – “convenience with discount prices”.
Carrefour International hypermarket banner introduced in Offers products under
1973 in Spain. different labels such as
Concept – “everything under one roof”. Carrefour, Filiere Qualite,
Reflets de France,
Focus on product quality, safety and innovation Destinations Saveurs, Tex.
with wide range of services like insurance,
financial services, travel, car service, eye care,
florists, and tickets sales.
8 a Huit Convenience store banner opened in France in Leader in France and has
1977. self-service stores in France,
Offers 2,000-5,000 products with a mixture of big West Indies, Guyana.
brands and private labels. Retail space of 70 to 400
Concept – “8 am to 8 pm shopping.” square meters.
Promocash Opened in 1965 in France as a cash and carry Trademark products include
banner. Reflets de France, Prorest,
Supplies wholesale and retail goods, both and Grand Jury.
foodstuffs and non-foodstuffs to restaurant
owners, hoteliers, café proprietors and food trade
professionals.
More than 10,000 quality products available in 8
sections: fresh meat, seafood, fruit and vegetables,
fresh grocery items, drinks, non-foodstuffs,
groceries, wines and beers.
21
Banners Description Facts

Shopi Introduced in 1973 in France as a convenience Retail spaces between 400 to
store banner in urban and rural areas. 900 square meters.
6,500 items including 2,500 fresh-food items and
1,000 own-branded products provided at
supermarket prices.
Consists of fruit and vegetable departments, wine
shops, and personal care.
Proxi Chain of mini markets with full range of food Brands featured are
products at affordable prices. Destination Saveurs and
Offers convenience services like home delivery, Reflets de France.
gas bottles, bakery and ATMs. Sales area of 80 to 200
square meters.
Marche Convenience store located in the heart of urban Sales area of 200 to 400
Plus districts. square meters.
Product mix of 4,000 lines. Distributes the Grand Jury
Specializes in fresh products including fruit and brand which has products
vegetables. that need strict specifications
to meet the consumers‟
Concept – “quick and easy shopping from 7 am to requirements.
9 pm and on Sunday morning.”
Adapted from www.carrefour.com.
22
Exhibit IV
Carrefour – Consolidated Store Network (December 2005)*
Hyper- Super- Hard Cash &
Convenience Total
Market Market Discount Carry
Argentina 28 114 319 461
Brazil 99 35 201 335
Colombia 21 21
Americas 148 149 520 817
China 70 8 225 303
Korea 31 31
Taiwan 37 37
Indonesia 20 20
Malaysia 8 8
Singapore 2 2
Thailand 23 23
Asia 191 8 225 424
France 179 595 782 108 1664
Spain 136 143 1891 2170
Belgium 56 79 135
Switzerland 9 9
Greece 19 148 267 52 486
Italy 50 238 16 155 459
Poland 32 71 103
Portugal 7 292 299
Turkey 12 86 339 437
Europe 321 765 2789 16 207 4098
Total 839 1517 4316 124 207 7003
Group
* Does not include stores owned by partners.
23
Exhibit V
Carrefour – Consolidated Net Sales per Format/Region (2005)
(In million €)
Format/Region France Europe Americas Asia Total % Sales

Hypermarkets 18717 15424 3989 5672 43802 58.8%
Supermarkets 7515 5020 694 10 13239 17.8%
Hard Discount 2227 3784 369 61 6441 8.6%
Other 7119 3873 23 - 11015 14.8%
Total 35577 28102 5075 5743 74497 100.0%
% Region 47.8% 37.7% 6.8% 7.7% 100.0% -
Source: Carrefour, Creating a New Growth Platform, www.carrefour.com, March 2006.
Exhibit VI
Regulations in the Retail Industry in China: Pre and Post 2004
PRIOR TO 2004:
Prior to July 1992, foreign investment in the form of joint ventures or wholly-owned
subsidiaries was totally prohibited in the retail industry in China. In July 1992, the Central
Government, on an experimental basis, allowed foreign investment in the retailing industry
through the establishment of joint ventures in Beijing, Shanghai, Tianjin, Guangzhou, Dalian,
Qingdao and the five special economic zones (Hainan, Shenzhen, Zhuhai, Shantou, and
Xiamen).
In June 1995, the Central Government listed the retail industry in the Directory for Foreign
Investment, although under the “restricted” category, to encourage foreign investment in the
industry. By the year-end, the provincial and state governments had approved up to 300 joint
ventures. In mid-1998, the Central Government disallowed local government approval and
asked foreign-invested joint venture companies, which had taken such approval, to restructure to
conform with the 1992 provisions or close down.
In June 1999, the Central Government issued more liberalized provisional rules on foreign
investment in the retailing industry. The rules allowed foreign retailers to establish joint
ventures cooperative retail, or wholesale companies in Central Government administered cities,
the five special economic zones, and the capital cities of provinces and autonomous regions with
certain restrictions. They were:
 The stake of the Chinese partner in any newly established wholesale joint venture had to be
at least 51%.
 Specific requirements as per sales and assets were to be followed by the joint ventures.
Franchising and other forms of indirect chain-store formats were prohibited.
 Foreign commercial joint ventures were not allowed to act as a commodity import or export
agent.
 Commercial joint ventures were allowed to import products they sold, limited to 30% of
their total yearly sales revenue.
Contd…
24
Contd…
POST 2004:
After 2004, when China allowed wholly-owned foreign retailers to own their Chinese
subsidiaries and open stores at any geographic location of their choice without government
permission. With the restriction on the number of stores having been lifted, foreign retailers can
open an unlimited number of stores in any city. Also foreign retailers do not have to meet any
minimum criteria for sales, capital or assets, to enter the Chinese market. Foreign companies are
allowed to source global brand merchandise locally without any stipulation that the goods
purchased should be exported. Foreign retailers are allowed to run all distribution activity
inclusive of transportation, wholesaling, and retailing.
Foreign Investment in China’s Retail Industry
Before 2004 After 2004
Geographic Retail limited to certain cities Restriction on retail lifted from
Restraints like Beijing , Shanghai, etc December 2004
Form of Vehicle Only Joint Venture Wholly foreign owned
enterprises (WFOE) allowed
from December 2004
Prerequisites for Annual sales volume of at least Good reputation
Retail JV US$ 2 billion, assets at least No breach of national laws
US$ 200 million
Pre requisites for Annual sales volume of at least Good reputation
Wholesale JV US$ 2.5 billion, assets at least No breach of national laws
US$ 300 million
Minimum registered RMB 50 million (US$6.4 RMB 300,000 (US$36,245)
Capital for retail million)
JV/WFOE
Minimum registered RMB 80 million (US$ 9.7 RMB 500,000 (US$60,408)
Capital for wholesale million)
JV/WFOE
Approval authority Ministry of Foreign Trade and Provincial commerce authorities,
Economic Cooperation MOFCOM
(MOFTEC)
Source: US-China Business Council. (Retail Outlook for China, KPMG, October 2005).
With the removal of the restriction, hypermarkets, supermarkets, and convenience stores have
mushroomed in the wealthy coastal cities in China. The number of specialty stores that sell non-
food items like apparel, electronic goods, furniture, etc. has also grown. Not only foreign
retailers like Carrefour, Wal-Mart, Metro, Ikea, and B&Q but several local stores like Lianhua,
Hualian, and Wu-mart were also operating hypermarkets and supermarkets of international
standards.
Compiled from various sources.
25
Exhibit VII
Carrefour – Hypermarkets in China (October 2006)
Location No. of Stores
Beijing 6
Shanghai 10
Tianjin 5
Chongqing 4
Guangzhou, Guangdong Province 4
Shenzhen, Guangdong Province 5
Zhuhai, Guangdong Province 1
Shenyang, Liaoning Province 4
Dalian, Liaoning Province 3
Harbin, Heilongjiang Province 3
Qingdao, Shandong Province 2
Jinan, Shandong Province 1
Urumqi, Xinjiang Uygur 2
Nanjing, Jiangsu Province 2
Ningbo, Zhejiang Province 1
Wuxi, Jiangsu Province 2
Hangzhou, Zheijiang Province 1
Suzhou, Jiangsu Province 1
Xuzhou 1
Hefei, Anhui Province 2
Dongguan, Guangdong Province 1
Changsha, Hunan Province, 1
Wuhan, Hubei Province 4
Chengdu, Sichuan Province 4
Kunming, Yunnan Province 4
Fuzhou, Fujian Province 1
Xi‟an, Shaanxi 1
Xiamen, Fujian Province 1
Zhengzhou, Henan Province 1
Luoyang, Henan Province 1
Nantong, Jiangsu Province 1
Adapted from www.carrefour.com.cn.
26
Exhibit VIII
Carrefour – Private Label Products Sold in China
Carrefour Quality Line
The Carrefour quality line consisted of fresh products and was sold to customers only after they
met stringent quality standards, which included origin, traceability, and supply chain principles.
Carrefour sold pork, salmon, apples, oranges, litchi, etc. under this line.
Carrefour Brand
The Carrefour Brand was launched in 2004 and was sold in all stores across China. Carrefour
sold more than 900 food and non-food products under this line. To ensure the quality of the
products, Carrefour made outside laboratories conduct quality checks on the products.
Firstline Brand
Firstline is Carrefour‟s own brand under which it offered a wide range of kitchen appliances,
audio accessories, and video accessories. In 2006, Carrefour also introduced the European line
of kitchen appliances, including coffee makers, juice extractors, sandwich makers, toasters, egg
beaters, electronic ovens, etc.
French Touch Brand
French Touch offered a wide range of clothing and household products of high quality.
Bang Products
Bang is the label under which Carrefour sold popular low priced items.
Source: www.carrefour.com.cn.
Exhibit IX
A Note on Supply Chain and Logistics Network in China
China has a vast size and a varied topography. Despite initiatives taken for improving regional
motorways and national highways, the quality of road and rail network varies drastically
between the urban and rural areas. Roads are easily damaged due to the weight of overloaded
freight trucks. Until recently, drivers were given licenses based on truck size rather than truck
loads.
 China‟s logistics industry is fragmented. Logistics accounts for an estimated 20 percent of
GDP compared with about 8 percent of GDP in the US.
 In China, 21% of large corporations (including multinational corporations) outsource logistics
to third-party logistics providers as compared with 45% in the European Union and the US.
 In Chinese firms, outsourcing accounts for only 5 percent of all logistics spending, leading to
massive duplication and underutilization of supply chain assets, such as ocean shipping
containers.
With this fragmentation, railway and trucking traffic in China far exceeds the capacity the
infrastructure was designed to handle, leading to shortages of key commodities and increased
logistics costs.
Adapted from Jeff Richards, Jihong Sanderson and Roger MacFarlane, Understanding RFID Adoption in
China, http://www.rfidjournal.com, February 07, 2005 and other sources.
27
Exhibit X
Visuals of a Typical Carrefour Hypermarket in China
Source: www.crienglish.com.
Source: www.admirabledesign.com.
Source: www.admirabledesign.com.
28
Exhibit XI
Wal-Mart in China
Wal-Mart began groundwork for its Chinese operations in 1994, and started actual operations in
the country in 1996 by opening its first Super Centre and Sam‟s Club in partnership with
Shenzhen International Credit Investment Company in Shenzhen. China presented several
challenges to Wal-Mart, as it was the company‟s first foray into Asia. The consumers in
Shenzhen reacted positively to Wal-Mart‟s Chinese venture. Wal-Mart established four
development centers in Shenzhen, Kunming, Beijing and Dalian to manage the Chinese
operations. Gradually, Wal-Mart spread its operations in the country. In Northern China, super
center was opened in association with Dalian Huanan Group Company Limited, in 2000. In the
East, a store was opened through a joint venture, Wal-Mart East China Stores Company in
2002. In 2005, a store was opened in Shanghai through Wal-Mart East China Stores Company.
In order to maintain low prices, Wal-Mart began procuring goods locally, and opened
procurement centers and distribution centers in the country. As the goods were sourced locally,
Wal-Mart was able to maintain competitive prices. To ensure the quality of the products, Wal-
Mart sent its managers to suppliers‟ factories and also maintained an extranet site to share sales
information and consumer‟s expectations from the suppliers.
When Wal-Mart started its operations in China, the workforce was completely American.
Gradually, several Chinese were employed as managers and shop assistants. Wal-Mart
maintained a Chinese feel to its stores by selling goods and having Chinese employees. The
stores had wider aisles and smaller checkout counters to cater to the needs of the Chinese
customers who shopped frequently and in small quantities. Wal-Mart designed the packaging,
uniform of the shop assistants, and the décor according to the preferences of the Chinese
consumers. Wal-Mart took enough care to train the suppliers and employees and regularly
featured on the list of most preferred employers in China.
In the US and rest of the world, where Wal-Mart operated, its success was attributed to its
highly effective supply chain and logistics. But in the Chinese market, Wal-Mart could not reap
the benefits attributed to the supply chain, as it was not well developed and was highly
fragmented. Wal-Mart also faced stiff competition from domestic and foreign players active in
the retail sector. Wal-Mart‟s Everyday low pricing strategy was easily copied by other retailers.
As of January 2006, Wal-Mart operated through 56 stores in China. As the stores were few and
widespread, the distribution centers could not be utilized fully. Another obstacle was the
absence of nation-wide distribution system, which limited Wal-Mart‟s economies of scale. The
suppliers complained about the short lead time, sudden price reduction, and other practices like
squeezing the suppliers to maintain low prices, which forced several suppliers to close down.
The wages paid to the employees were subjected to sharp criticism as they were very low.
Another area of problem for Wal-Mart in China was its store formats and location of the stores.
With rigid store formats, Wal-Mart was not able to customize the stores to the extent it was
necessary in China.
Wal-Mart‟s limited exposure to international markets also proved to be an impediment to its
operations in China. Moreover, China was the first Asian country in which Wal-Mart had
started its operations. As the Asian market was quite different from the other markets in world,
Wal-Mart took time to expand in the market, which gave a chance to other domestic and foreign
retailers to consolidate their position in the market.
Adapted from various sources.
29
Exhibit XII
China – Spread of Competitors by Region* (March 2006)
South West North West North North East East Central South
Wal-Mart 7 0 9 11 3 6 20
Carrefour 9 3 15 10 16 7 13
Lianhua 3 0 23 10 60 8 7
Wu-Mart 0 0 45 0 10 1 0
* Stores with floor space > 4,000 sq.meters.
Adapted from China Resource Enterprise Limited, Global Roadshow, 2006.
30
Suggested Readings and References:
1. Rebecca MacKinnon, China’s Reforms Produce Winners, but More Losers,

www.cnn.com, October 1999.
2. Carrefour has Problems with Chinese Government, www.unionnetwork.org,
February 08, 2001.
3. Vive la Difference, Business China, The Economist Intelligence Unit, February 12, 2001.
4. How to Win in China, Business Asia, June 11, 2001.
5. Carrefour Builds Procurement Center in China, www.foodnavigator.com, July 31, 2001.
6. Foreigners Battle for China’s Shoppers, Global Finance, December 2001.
7. Jenny Summerour, The China Connection, Progressive Grocer, January 01, 2002.
8. Carrefour to Add 10 to Growing Foreign Presence, DSN Retailing Today, May 06, 2002.
9. Carrefour Expands Business in China, www.peopledaily.com.cn, June 27, 2002.
10. Carrefour Complies, Opens Two New Units, DSN Retailing Today, July 08, 2002.
11. Can Wal-Mart Get Any Bigger? Time Magazine, January 05, 2003.
12. Carrefour Leads the China Rush – has More Retail Stores than Anyone Else,
www.unionnetwork.org, January 15, 2003.
13. Mark Faithfull, Europe’s Retail Giant, Display & Design Ideas, March 2003.
14. Carrefour Continues to Pioneer in China, www.euromonitor.com, April 14, 2003.
15. The Retail and Consumer Adventure of 21st Century: China – Golden Opportunities or
Emerging Threats? Background Material for Working Groups, World Economic Forum,
PricewaterhouseCoopers, January 2004.
16. Foreign Businesses Cash on Chinese Holiday Economy, www.peopledaily.com.cn,
January 20, 2004.
17. Chinese Rule Change to Spark Retail Growth, www.foodanddrinkeurope.com, March 19, 2004.
18. No Easy Way to Win in China: Carrefour, People‟s Daily Online, March 31, 2004.
19. ‘East Meets West’ to Drive China’s Retail Growth, www.foodanddrinkeurope.com,
March 31, 2004.
20. Carrefour Admits Selling Fake Louis Vuitton Handbags in China Store,
www.finanznachrichten.de, April 20, 2004.
21. French Firm Opens First Asian Store in Beijing, People‟s Daily Online, June 25, 2004.
22. Ed McKinley, For Developers, China ‘Wild East’ Frontier of Opportunity and Risk,
Shopping Centers Today, October 2004.
23. Carol Matlack, Wendy Zellner, Frederik Balfour, Carrefour in a Corner, BusinessWeek
Online, October 11, 2004.
24. Peter Gumbel, Pack Your Bags for the Orient Express, Time Europe Magazine,
October 18, 2004.
25. The Changing Face of Chinese Grocery Market, www.igd.com, December 10, 2004.
26. China and India: The Retail & Consumer Building Block of the Future, Background Material
for Working Groups, World Economic Forum, PricewaterhouseCoopers, January 2005.
31
27. Tan Wei, Leveling the Playing Field, www.bjreview.com, January 07, 2005.
28. Let China’s Retail Wars Begin, BusinessWeek, January 17, 2005.
29. IGD Predicts Convenience Will Take off in China, www.igd.com, February 16, 2005.
30. Hayet Sellami, Carrefour China: A Local Market, www.cityweekend.com, April 28, 2005.
31. The Path to Success for Retailers and Consumer Brands in China, Ernst & Young, June 2005.
32. James Murphy, Carrefour Scoops Top Spot in Study of China Retailers, Media Asia,
August 26, 2005.
33. Paul K. Ward, Goofing up Global CRM, www.crm2day.com, September 06, 2005.
34. Carrefour at the Crossroads, Economist, October 22, 2005.
35. Retailing in China – The Battle has Just Begun: Local vs. Foreign Retailers,
www.kmpg.com.cn, October 26, 2005.
36. Leah Vyse, Carrefour Strengthens Position in China, www.foodanddrinkeurope.com,
October 31, 2005.
37. Maria Trombly, Betta Plebani, In China, Complex Supply Chains Yield to Simple
Systems, www.ciocentral.com, November 07, 2005.
38. Jay McIntosh, Dan Valerio, Spanning the Globe, Chain Store Age, December 2005.
39. Parija Bhatnagar, Wal-Mart’s Challenge in China, CNNMoney.com, January 12, 2006
40. Anita Awbi, Global Retailers Invade China’s Regional Cities,
www.foodanddrinkeurope.com, January 12, 2006.
41. Carrefour Focuses Growth on Mall-based Retail Outlets, Shanghai Daily News,
January 20, 2006.
42. China Retail Sales ‘to Rise 11%’, www.news.bbc.co.uk, February 13, 2006.
43. Carrefour Boosts China Presence, www.news.bbc.co.uk, February 24, 2006.
44. Foreign Retailers Accelerate China Plans, Asia Times, March 02, 2006.
45. Zhang Lu, China Sees Slower Sales Revenue Climb in 2005, www.chinadaily.com,
March 23, 2006.
46. Investing in China’s Retail Industry, PricewaterhouseCoopers, April 2006.
47. Anita Awbi, Carrefour’s Overseas Operations Take New Twist,
www.foodanddrinkeurope.com, April 28, 2006.
48. Ben Moshinsky, Carrefour Fined in China Piracy Case, The Lawyer, May 01, 2006.
49. Carrefour Sells Fake World Cup Football Gear, www.chinacsr.com, June 9, 2006.
50. Anita Awbi, Carrefour Moves Closer to Customers, www.foodanddrinkeurope.com,
June 09, 2006.
51. Matthew Boyle, Some Shoppers Just Want to Have Fun, Fortune, June 20, 2006.
52. World’s Leading Retailers Battle for New Chinese Markets, www.chinaview.cn, July 03, 2006.
53. Don Lee, A Chinese Lesson for Big Retailers, Los Angeles Times, July 02, 2006.
54. Mei Fong, Chinese Rules could Tie Up Foreign Retailers, The Wall Street Journal,
July 17, 2006.
32
55. Peter N. Child, Lessons from a Global Retailer: An Interview with the President of
Carrefour China, The McKinsey Quarterly, July 19, 2006.
56. Overseas Retailers Have More in Store, Shanghai Daily, July 27, 2006.
57. Carrefour Leads China Charge, www.attimes.com July 28, 2006.
58. Ready for the Warfare in the Aisles, Economist, August 05, 2006.
59. Emily Kaiser, Global Retailers Expand to China, India, www.news.com.au,
September 18, 2006.
60. Global Retailers Pick Select Markets, The Economic Times, September 20, 2006.
61. www.carrefour.com.
62. www.carrefour.com.cn.
63. www.admirabledesign.com.
64. www.crienglish.com.
33

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IBS Center for Management Research

Carrefour’s Strategies in China

S P Jain School of Global Management

 2007, IBS Center for Management Research. All rights reserved.

Carrefour’s Strategies in China

THE ‘GREAT MALL’ OF CHINA

President Enterprises Corporation16. Initially, Carrefour aimed at building a hypermarket of 10,000

ENTRY AND EXPANSION IN CHINA

Country Year of Entry

Year City Partner

Banners Description Facts

Format/Region France Europe Americas Asia Total % Sales

Visuals of a Typical Carrefour Hypermarket in China

Suggested Readings and References:

1. Rebecca MacKinnon, China’s Reforms Produce Winners, but More Losers,

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