Carrefour's Exit from South Korea

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Case Details:

Case Code : BSTR241
Case Length : 19 Pages
Period : 1995-2006
Organization : Carrefour
Pub Date : 2006
Teaching Note :Not Available
Countries : South Korea
Industry : Retailing

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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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Going Global

Carrefour began to enter international markets after a law was passed in France in 1963 to restrict the development of large stores. For its 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's first venture outside Europe was its hypermarket in Brazil in 1975. In foreign markets, Carrefour was careful to customize its operations to the preferences of local customers. Instead of selling imported French products, Carrefour sold local products through its stores. In 1978, Carrefour developed a hard discount store format, under the banner Ed, in France.

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The store offered a limited range of products at very low prices. By 1985, Carrefour was operating in ten countries and had introduced private label products that were priced 10-20% lower than the branded products and were said to be of superior quality...

Carrefour in South Korea

During the late 1980s, the economies of several Asian countries like Taiwan, Singapore, South Korea, Thailand etc. were booming. 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 there. Its next destination was Malaysia, followed by China and South Korea (Refer Table III for details of Carrefour's entry into Asian markets).

In the early 1990s, there was a growing demand from the South Korean consumers for modern shopping experience owing to the country's rapid economic growth and increasing income.

The Government had adopted protectionist policies and the retail sector was not open for foreign direct investment at this time. The retail sector was dominated by mom-and-pop stores, which accounted for about 80% of the total retail sales in the country...

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