Tesco in China

Extract

[...] In Chinese a word can have a multiple meanings. Reader or listener will not understand exact meaning of the word unless they clearly understand the context in which that word is used. On the other hand English words have clearly defined meanings and are not highly dependent on words surrounding them; therefore it would be difficult to understand in high context cultures, as they are missing essential contextual detail. (Papavassiliou et al., 1997) • Consumer profile Typical Chinese consumer perception, tastes and habits differ from the typical western consumer. [...]

[...] Tesco's British National Culture As the product of its national culture, Tesco's organisation shows artefacts and behaviour that reveal that it shares common values and assumptions with its culture. England has a relatively low to medium power distance. It means that people in this country, according to Hofstede's research, are not as tolerant with differences in status, and prefer egalitarian relationships instead of strongly hierarchical relationships. We will see later how it is expressed in Tesco organization culture statements. England ranks high in individualism. The person is valorised instead of the group, and personal achievement is more important than team success. [...]

[...] What should be its strategy? Should it stay in the joint venture with Ting Hsin? In the following report, we present our analysis of the situation and our recommendations. External analysis Overview of the Chinese Food Retail Industry The Chinese food retail industry generated total revenues of $ 334.9 billion in 2005, which represents an increase of on 2004's value. The industry grew at for the 2001- 2005 period, nearly double the figure for the wider Asia-Pacific region of ‘The leading revenue source in the Chinese food retail industry is the supermarkets segment, which accounted for 35% of the total industry's value in 2005, equivalent to $ 117.1 billion.' (Datamonitor, 2006) PESTEL Model Politico-Legal o Government encouragement for domestic retailers The party plans to develop 5 to10 major retail chains via mergers, restructuring and investment, establishing them as national-wide brands that can compete with international retailers. [...]

[...] In 2004, per capita urban income was more than three times the level of per capita rural income, increased three times that of 1994. The reason behind the consumption disparity lies in the income differences between urban and rural areas. Retail sales of consumer goods in urban China far outpace those of rural China. (Euromonitor, 2006) Technological China is improving in terms of overall infrastructure, meaning that there are fewer problems regarding transport and logistic. Key drivers of Change ← Government interference Since all restrictions for foreign retailers have been taken away, more aggressive approach from foreign companies can be expected. [...]

[...] (Schneider and Barsoux, 2003) Unlike the Eastern European culture, the Chinese culture is a family culture meaning that people like to belong to a group, a “family”, a concept resumed before under the idea of “Guanxi” (Schneider and Barsoux, 2003). Part of the way they express the underlying value of Guanxi is revealed in their consuming habits. Chinese consumers like to shop in small outlets, street shops where they know the sellers; they like to have friendly relationship with sellers (Luy and Wang, 1999). One of Tesco's challenges will be to become more than a neighbour, to be closer to the customers than in Britain. [...]