Carrefour's Strategies in China

            
 
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Case Details:

Case Code : BSTR246
Case Length : 30 Pages
Period : 1995-2006
Pub Date : 2007
Teaching Note : Available
Organization : Carrefour
Industry : Retailing
Countries : China

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts Contd...

Store Management

As a part of its global strategy, Carrefour had decentralized its operations, giving full freedom to store managers to operate their stores. Decentralization was one of the important factors for Carrefour's success in international markets, with store managers being empowered to take decisions according to the local traditions and customs...

Supply Chain Management

The supply chain system that Carrefour had in China was quite flexible. According to Christophe De Nays Candau, In-charge of Organization, Systems and Supply Chain in Carrefour, China, "It's (supply chain system) highly fragmented, so we have to keep our flexibility. We still use the bike if it's the lowest cost and most efficient."

Carrefour procured most of the goods from within China to cater to its local operations. Since its initial years of operation in China, about 85% of the stock sold was procured locally. This helped Carrefour maintain lower prices compared to other foreign retailers, who sold imported products...

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Localization Strategies

Carrefour believed that its stores should reflect the local environment and complement the local culture. The western style hypermarket was customized by Carrefour to effectively cater to the needs and preferences of Chinese consumers (Refer to Exhibit X to see a few visuals of a typical Carrefour hypermarket in China)...

The HR Practices

Though Carrefour had expanded its operations all over the world, the organization remained lean as several of its key functions were decentralized. The headquarters had a staff of only about 20, with around 10 people involved in the HR function...

The Challenges

Industry analysts opined that customizing its store formats to suit local needs had been Carrefour's main strength and this had helped the company penetrate large and tier II cities in China. Despite rapid growth, Carrefour's share in China was only at around 1.5% of the organized retail market...

Exhibits

Exhibit I: Top 25 Food Retailers in the World (December 2005)
Exhibit II: Retail Industry in China (2006)
Exhibit III: Carrefour's Banners
Exhibit IV: Carrefour - Consolidated Store Network (December 2005)*
Exhibit V: Carrefour - Consolidated Net Sales per Format/Region (2005)
Exhibit VI: Regulations in the Retail Industry in China: Pre and Post 2004
Exhibit VII: Carrefour - Hypermarkts in China (October 2006)
Exhibit VIII: Carrefour - Private Label Products Sold in China
Exhibit IX: A Note on Supply Chain and Logistics Network in China
Exhibit X: Visuals of a Typical Carrefour Hypermarket in China
Exhibit XI: Wal-Mart in China
Exhibit XII: China - Spread of Competitors by Region* (March 2006)


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