Abstract

One of the top retailers in the world, Germany-based retailer Aldi Süd (Aldi), known for its discount retailing, entered China in 2017, selling its products online through Tmall’s Global Platform. It ventured into physical stores in 2019 and opened two stores in Shanghai. Aldi had tweaked its no-frills, deep discounter strategy to cater to the needs of tech-savvy Chinese consumers. It offered an exclusive proposition in China and focused on high quality, modern retail and convenience. When Aldi entered China, two major European retailers, Metro (from Germany) and Carrefour (from France), which had been present in China for over two decades, decided to exit the market. The two were the latest in the long list of Western retailers who had entered the country in the 1990s and exited after losing millions of dollars due to the growing competition and the challenging business environment. Not surprisingly, China had come to be known a ‘graveyard for Western retailers’ Unperturbed by the fate of the other retailers, however, Aldi continued to hold lofty plans for the Middle Kingdom. It planned to increase the store count to 100 by 2025. Aldi was expected to face many challenges in its Chinese venture, ranging from its hard discounter business model, product range, store ambiance, competition, growing preference for online retail, and a challenging retail environment.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Examine why companies enter other markets and invest in other countries
• Understand the retail environment in China and Assess the challenges Western retailers face in China
• Analyze the features of hard discount retailers
• Examine the nuances of the Prior Online market entry strategy
• Determine how the environment in emerging economies affects the strategies of global companies

Keywords

Retail; Chinese retail landscape; Global retailers in China; Hard discounters; prior online market entry; Chinese retail environment; entering foreign market; country attractiveness; competitive strength; market portfolio analysis; challenges for foreign businesses in China; localization; entry strategy