Legal
1. Legislation changed recently (2004) to allow other foreign private firms to participate in the retail market through whole owned stores. (Before, the market was heavily controlled by the government; Carrefour was sanctioned for illegal expansion as a foreign investor in the country). (-)
2. Market deregulation and new governmental reforms allows foreign competitors to enter and expand within the market with minimal restrictions. (The remaining restrictions are to be eliminated by the end of 2007) (-)
Strategies Implemented
1. These Problems with Government regarding the ownership stake, led Carrefour to penetrate the market through Joint Ventures and Acquisitions.
2. Carrefour is now expanding rapidly and recently opened its 103rd Hypermarket.
Economical
1. Population: 1.3 billion, represents huge potential market for Carrefour, the 2nd largest retailer in the world, and now 7th largest retailer in China (+)
2. People are acquiring more purchasing power
3. China’s economy is growing fast (+)
4. Increases in customer’s income (+)
5. The over all cost involved in Carrefour’s Chinese operations was growing. Property prices in urban areas were rapidly increasing, so were the wages & advertising expenses(-)
6. Supply Chain management issues (-) : a.) Highly fragment logistic industry, b.) different distributors and different products in different regions, c.) lack of experience & Know How from local suppliers to maintain ideal inventory levels (often products were out of stock and there wer ...