Carrefour's Retreat from China

Carrefour's Retreat from China
Case Code: BSTR593
Case Length: 14 Pages
Period: 1995-2019
Pub Date: 2019
Teaching Note: Available
 Price: Rs.400
Organization: Carrefour S.A
Industry: Retailing
Countries: China
Themes: Market Entry & Exit, International Operations, Technology in Healthcare, Strategy Formulation
Carrefour's Retreat from China
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

This case discusses the circumstances that led to France-based multinational retailer, Carrefour S.A. (Carrefour), one of the largest hypermarket chains in the world, exiting China, a market in which it had operated since 1995. In June 2019, Carrefour announced that it would sell 80% of the stake in its China business for RMB 4.8 billion (US$ 698 million) to one of the largest non-government retailers in China, Suning.com Co., Ltd. (Suning). Carrefour entered China in 1995, when the Chinese Government had partially opened up the retail sector. In China, where vast economic, social, and cultural differences existed among different provinces, Carrefour was able to cater to the needs of different customers successfully. It adopted various strategies to localize its stores and offerings, which helped it make a mark in the Chinese retail market. However, by 2018, Carrefour was struggling to safeguard its position in China amid severe competition from local players and a tough online market. Its moves into China’s tier-two and tier-three cities did not pay off to the extent it had expected. With the rise of other domestic and international retail giants in China, Carrefour continued to lose market share. Due to the increasing costs of logistics and real estate, customers’ shift to ecommerce websites and changing customer shopping habits in China, Carrefour could not sustain its position. Analysts said that Carrefour’s exit proved that retail in China remained a tough terrain for top global retailers.

Issues

The case is structured to achieve the following teaching objectives:

  • Understand the nature of problems faced by foreign retailers like Carrefour in culturally different markets like China
  • Recognize the ways a company can localize its business operations in China and apply the same practices in emerging economies
  • Evaluate the market opportunities and assess customer value to build market share in countries like China
  • Evaluate the entry and expansion strategies of multinational companies in China
  • Study the regulations in international markets which have an impact on the entry of foreign retailers

Contents

Keywords

Corporate-level strategy; International management; International Strategy; Divestment strategy – model of leaving; Product/market diversity; International diversity; International strategy; Value creation; Five forces; ‘Global-local’ dilemma; Strategic alliances

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