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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Background Note

In the early 1950s, the grocery industry in France consisted mostly of family-owned stores. Though there were some big department stores, these charged exorbitant prices. At that time, the concept of free service was gaining popularity and there were very few stores in France that were providing such services. In 1959, two entrepreneurs, Marcel Fournier (Fournier) and Louis Defforey (Defforey) from Annecy in Eastern France decided to establish a large discount supermarket. Initially, they offered 7,000 shares to 10 stockholders and purchased a facility that was under construction...

Going Global

Carrefour started making efforts to enter international markets after a law was passed in France in 1963 to restrict the development of large stores. For international expansion, Carrefour adopted the route of forming alliances with local partners. Its first international venture was in Belgium, where it opened an outlet in association with Delhaize Fréres-Le-Lion , in 1969. Carrefour expanded its operations outside Europe by opening a hypermarket in Brazil in 1975.

In 1978, Carrefour developed a hard discount store format, under the banner Ed in France (Refer to Exhibit III for different banners of Carrefour)...

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Carrefour in Asia

During the late 1980s, the economy of several Asian countries like Taiwan, Singapore, South Korea, Thailand etc. was rapidly growing. In order to reap the benefits of this growth, Carrefour started its Asian operations by entering Taiwan in 1989. It established a joint venture with Uni President Enterprises Corporation...

Entry and Expansion in China

Carrefour identified China as one of the most important foreign markets, after the country partially opened its retail sector for foreign investments in 1992. Carrefour entered China in 1995 by forming a joint venture with the Chinese management consulting firm Zhong Chuang, and established a firm called 'Jia Chuang', in which it held the majority of shares...

The Strategies

While most of the global retailers and consumer product companies considered China to be a single huge market, Carrefour adopted a different approach. It considered the country to be comprised of several small markets...

Opening New Stores

Carrefour planned the expansion of its operations in China in a systematic manner by establishing regional offices. For instance, the headquarters of the East China region in Shanghai took care of expansion activities in that region. The headquarters of the Northwestern region was located in Xinjiang and it was responsible for expanding business in that region...

Excerpts Contd...>>

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