Tesco in the Chinese Food Retail Market Dissertation

Tesco in the Chinese Food Retail Market - Dissertation Example Most importantly, I would like to take this opportunity to express my gratitude to my parents who offer me the greatest support and encouragement. Table of Contents Table of Contents 5 List of Tables 7 List of Figures 8 1.0 Introduction 9 1.2 Research Question 13 2.0 Literature Review 14 2.3.1 PEST 21 2.3.2 SWOT 26 2.3.3 The Five Forces 27 2.4 Sustainable competitive advantage 32 2.5 Factors influencing strategies for achieving a competitive advantage in China 35 3.0 Methodology 40 4.0 Result 51 4.1 Carrefour Supermarkets 54 Organisation Overview 54 Operations and Business Strategy 55 Domestic Competition 57 Competitive Advantage 58 4.2 Wal-Mart 58 Organisation Overview 58 Operations and Business Strategy 59 Domestic Competition 60 Competitive Advantage 60 5.0 Discussion 62 Organisation Overview 62 Operations and Business Strategy 63 Domestic Competition 65 Competitive Advantage 65 6.0 Conclusion 68 7.0 References 70 List of Tables Table 1. The amount of sales and the amount of chain stores of Carrefour in China Page 33 List of Figures Figure 1.0 Porter's Five Forces Model (Porter 2001). Page 20 1.0 Introduction China's admittance into the World Trade Organisation (WTO) in 2001 opened up the Chinese market to the rest of the world. From the end of 2004, the Chinese government began lifting restrictions on foreign retailers, which enabled retail operations that were 100% foreign owned to operate (LaSalle 2005, Chen 2006, Tao 2006). This opportunity was obviously seized upon by retailers like Tesco, Carrefour and Walmart who dominate the foreign-owned food retail market. The Chinese market is particularly attractive as it is not... Introduction China’s admittance into the World Trade Organisation (WTO) in 2001 opened up the Chinese market to the rest of the world. From the end of 2004, the Chinese government began lifting restrictions on foreign retailers, which enabled retail operations that were 100% foreign owned to operate (LaSalle 2005, Chen 2006, Tao 2006). This opportunity was obviously seized upon by retailers like Tesco, Carrefour and Walmart who dominate the foreign-owned food retail market. The Chinese market is particularly attractive as it is not homogenous and encompasses numerous target markets which represent purchasing power for retailers. This is particularly true of the markets based in the urban areas, as it is reported that there is an income disparity between rural and urban customers. The urban per capita income is three times more than that of rural areas (LaSalle 2005, Chen 2006, Tao 2006), which presents profit to the food retailers. The opening up of the markets in China has also introduced competitive advantage to the Chinese market. Prior to 2004, foreign owned companies had to form joint ventures with Chinese companies and were limited to owning a 65% stake in the business (LaSalle 2005, Chen 2006, Tao 2006). They also had restrictions on the number of stores that could be opened in a geographical region, which gave the domestic retailers a competitive advantage. Domestic retailers had access to the entire Chinese market, and as a result they also had the monopoly on the knowledge.