Lately the Carrefour group inaugurated its store numbered one thousand in the world, in China. Its eight hypermarkets in Japan were yielded to the Japanese group Aeon. Such a paradox within the same continent pushes one to question on the strategy of the French giant in Asia.
The group faced some problems on its national market by the increased competition from Leclerc and Inter-market. Indeed, Daniel Bernard, chairman of Carrefour, lately revealed a fall of the sales in France. This situation leads Carrefour to be more and more internationalized. It has it presence in all the continents, and in Asia where it made its entry in 1989 in Taiwan.
Today it is present also in China and Japan. Nevertheless, if one believes Asian Wall Street Journal of it, the Japanese adventure Carrefour is also threatened.
Carrefour had made a bet risked while unloading in Japan in 2000, choosing to leave to the conquest of the market being considered difficult. The future of Carrefour in Japan does not depend only on its problems of frequentation. Its assertion on the Japanese market remains conditioned by a presence still too weak.
The group does not have enough stores in Japan. It would need about thirty to occupy a more comfortable position. Then will the Carrefour, weakened on its national bases, be able to also fight on the Japanese market? On the other hand, its presence in China does not cease to grow and makes it a leader on the market in front of the world giant Wal-Mart.
One can thus regard its establishment since 1995 on the Chinese market as a success. This diagnosis is based on a comparison between the reverse in Japan and the successful experience of Carrefour on the Chinese market.
In the eyes of the westerners, China and Japan are two Asian countries with many similar characteristics. However, they are deeply different and amalgamates established by Carrefour between these two countries is perhaps one of the reasons of its failure in Japan.
Actually, in a strategy of internationalization, the key success factors play a paramount role in the conquest of a country. Thus, the knowledge to play with address of these elements proves to be determining.
From this report, one can wonder how a great group like Carrefour, accustomed to a strategy of expansion, can stumble in Japan where as it knew to generate growth and a complementary turnover in China?
This paper will try to analyze the differences the Carrefour group should have distinguished between the Chinese and Japanese markets to adapt to it consequently.
China fully liberalized since December 2004 wants to sustain the pace of economic growth so applies to comply with the WTO agreements that will promote the development of foreign investors in the retail sector.This agreement opens the doors to foreign investors and allows China to ensure that domestic consumption is growing at a rapid pace.
The distribution of settlements is not really consistent with 75% of the area of sales in the eastern China, a quarter of the territory only.
The financial stakes are huge because of the investment required to acquire market share in a highly competitive environment and where the central government wants to see Chinese companies compete with the first international groups.
Tags: Carrefour in Asia, expansion strategy, internationalization diagnosis
[...] But Japan remains cautious with respect to the investment strategy with only of FDI in China. But Japan is also in competition with its neighbor: China overtook Japan in export volume In GDP terms, China will overtake Japan by 2025 The two countries are competing to sign free trade agreements in Asia Economic relations are very strong especially with China, where Japanese companies are located in number and more with a view to penetrating the market and not just low-cost manufacturing. [...]
[...] Operations in China continued to grow, with store growth of 4.9 %.In total, sales in the country increased by at constant exchange rates over the total in 2006, supported by continued expansion policy of the Group. Carrefour has opened 22 hypermarkets in 2006, including nine in the fourth quarter. This presence requires a lot of broad efforts to adapt business: the distance between Beijing and Shanghai is the difference between Copenhagen and Malaga and consumption patterns as different. Market Analysis The Chinese market is very special. [...]
[...] In addition, mistakes in strategy implementation are even more damaging than the country that is far to match the standards and criteria of the developed countries. If an exporting firm has a large volume of trade in the country, opening a representative office in China is possible.Indeed, the Chinese government seeks to accommodate more and more foreign companies and encourages them to establish a representative office, which forms the first step in the establishment in China. However the implementation of a company in China is still the subject of a long process monitored by the administrative authorities. [...]
[...] But they are profoundly different and Carrefour implementing the same strategy it followed in China in the Japanese market may be one of the reasons for its failure in Japan. In fact, in an internationalization strategy, the key success factors play an important role in the conquest of the country. Thus, knowing how to play with these elements is decisive. A poorly controlled strategy can significantly disrupt the start of the implementation of the group. From this, one may question how a large group such as Carrefour, can become accustomed to an expansion strategy? [...]
[...] Country Installation Stores Carrefour in Asia strategy Carrefour has a totally fragmented domestic market, the company has been willing to internationalize. However, internationalization does not happen overnight (markets to enter, customers, potential development). A true knowledge was therefore necessary. In addition, Carrefour could not emulate the European model in Asia, although it had proved its worth. Thus, after an international expansion in Europe in the 60's, Carrefour had felt that Asia was the world's future, its aim to be on the market despite the cultural and linguistic divisions. [...]
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