"I have confidence in the ability of the Group's management team to continue the satisfactory implementation of our strategy and successfully complete the major projects already underway, which are beginning to give us a glimpse of the Carrefour group of the future". These are some words of Mr Luc Vandevelve, chairman of the supervisory board of Carrefour, in the 2005 Annual Report of the company. Two years later, in 2007, it was clear that Mr Vandevelve's confidence was right. The glimpse is now even clearer: the strategy and projects of Carrefour have become successful.
At the same time, a part of the globe has woken up and has particularly caught the eyes of journalists and economists for some years: the Asian continent, and China in particular, which is now considered as a key to the Group's development. This study is aimed at discussing and analyzing the strategy of a mass marketing company in a giant country.
[...] In fact, China could become the 3rd outlet for Carrefour in terms of turnover biggest mass marketing groups specialized in dietary Number of Turnover 2005 Main brands Groups countries (billion before tax) Neighborhood Market Walmart (USA) Sam's club Carrefour 93.6 Carrefour, ED 30 (France) Metro 55.7 Extra, Metro, Real 30 (Germany) 54.2 Tesco 7 Tesco 48.7 Kroger, Ralph's, Smith's 1 Kroger (USA) Ahold 44.5 Albet Heijn, Gall & Gall 17 (Netherlands) Rewe 41.7 Rewe 14 (Germany) Auchan 41 Auchan, Atac 3 (France) Edeka (Germany) 38.1 Edeka, Netto, Spar 5 Aldi (Germany) 26 Aldi 16 As described, Carrefour is in Europe the mass marketing leader, very far from its main competitors. [...]
[...] CARREFOUR IN CHINA In order to fully analyse the subject, we then have to know more about the main actor, Carrefour. We will first see a general profile of the group in order to know more about its activities in the world. Then, we will focus on the key element of the subject, which it's the Carrefour's strategy to conquer a big and so different country such as China. Finally, we will draw a comparison between Carrefour and other French groups settled in China Carrefour's profile in the world Overall view of the group Created in 1959, the group has merged with Promodès in 1999, which allows it to get a predominant place on the European market, considering the food mass marketing. [...]
[...] As a consequence, in addition to the above mentioned actions, Carrefour will probably have to implement, or at least some of those, it could also prove its will to help China and take part to its development The role Carrefour could play in the Chinese society Foreign companies are settled in China because they have understood what is at stake and the large profits they can make in such a country. But they should not only take something from China, they have also a role to play and something to give. [...]
[...] Mentalities may not be as business-oriented as in the East, and Carrefour will have to explain them how it works, will have to train them, and maybe help them investing in order to deliver the right quantity at the right time. Anyway, it leads to a cost increase. It is all the more important as the basic challenges that retailers face are mainly related with costs, which should be controlled so as to provide strong margins. So, by expanding to the West, Carrefour obviously takes a risk and increases its logistical costs. [...]
[...] That is why it is important to have good relations with local partners by developing the “Guan For example per cent of the products Carrefour is selling in China come from Chinese suppliers. And to ensure good relations with the authorities, Carrefour France welcomes more than 35 delegations of the Chinese Trade Ministry each year. The Chinese government is also satisfied that Carrefour expands in the centre of the country, and not only in the main towns on the East, even if the average consumer's basket is 5 times lower than the one in Shanghai. [...]
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