Tesco in China

Résumé du document

The aim of this report is, advice Tesco's operation in China as they are planning to expand. While the first part of this report examine Tesco's external environment, the second part focuses primarily on the cultural factors that need to be considered in their expansion plan, with addition to HRM and marketing strategies they should pursue. The outcome of this analysis will represent the basis for our final recommended strategy- whether Tesco should continue its current joint venture with Hymal or open its own stores? It has been requested by Tesco plc. The submission date is the 28th of November 2006.

Extraits

[...] Hymall owes today 39 hypermarkets in China. In Tescos 2006 annual report, they state that it is developing a strong local team and is transferring the know-how and systems to Hymall. Tesco has planned to open 12 new stores for next year. What should be its strategy? Should it stay in the joint venture with Ting Hsin? In the following report, we present our analysis of the situation and our recommendations. External analysis Overview of the Chinese Food Retail Industry The Chinese food retail industry generated total revenues of $ 334.9 billion in 2005, which represent an increase of on 2004's value. [...]

[...] England ranks high in individualism. The person is valorised instead of the group, and personal achievement is more important than team success. Uncertainty avoidance is relatively low, which means that British people are at ease while vague, broad definition of task, for example, in the work world. The country also ranks medium to high context culture. The English people are not straightforward with their speech, they can say something that depending on the context will mean something else and there is place for interpretation. [...]

[...] This will enable them to grow within Tesco and develop on their skills and competencies. Implement a Recognition System In China, it is a common practice to praise employees that have achieved outstanding results. This will intend to boost their moral and give them an additional drive and motivation to work to their fullest capabilities. In addition, it is of great importance to enable Chinese employees for key management posts. This localization process is suggested for the following reasons. First, foreigners have faced in the past a number of problems and challenges in managing and “leading operations while making prompt, accurate business decisions in China.” (Taura, 2005) Second, if foreign representatives are mainly in charge of key management posts this can result in anger and frustration for the Chinese employees because they do not see any prospect in career development. [...]

[...] It is mainly located in the south of China. More than 95% of its products sourcing comes from local producers. Domestic competition While analysing Tescos' competitors in the Chinese market we have realized that the main competition in China was not the one we knew well, but rather small, aggressive and local Chinese supermarkets that hold more than of the market. (Euromonitor, 2006) Today hypermarkets and stores are located by provinces meaning each province has its own food retailers. But the government is currently trying to assemble all these retailers to create bigger one that can compete against foreign giants. [...]

[...] (Datamonitor, 2006) Socio-Cultural o Disparity between urban and rural areas China is far from homogeneous in terms of the geographical distribution of population and retailing. The disparities are between South and North and rural and urban areas and in terms of income and consumption growth it is more than obvious. In 2004, per capita urban income was more than three times the level of per capita rural income, up from below three times in 1994. The reason behind the consumption disparity lies in wide income differences between urban and rural areas. [...]