Carrefour in China

Résumé du document

"I have confidence in the ability of the Group's management team to continue the satisfactory implementation of our strategy and successfully complete the major projects already underway, which are beginning to give us a glimpse of the Carrefour group of the future". These are some words of Mr Luc Vandevelve, chairman of the supervisory board of Carrefour, in the 2005 Annual Report of the company. Two years later, in 2007, it was clear that Mr Vandevelve's confidence was right. The glimpse is now even clearer: the strategy and projects of Carrefour have become successful.
At the same time, a part of the globe has woken up and has particularly caught the eyes of journalists and economists for some years: the Asian continent, and China in particular, which is now considered as a key to the Group's development. This study is aimed at discussing and analyzing the strategy of a mass marketing company in a giant country.

Extraits

[...] At first sight, Chinese always seem to be suspicious people. But once one has acquired their complete trust, one becomes their friend and they will do their best to help you, always in a personal capacity and in condition you let them return the favour sometimes. The successful companies in China are precisely those which leaned on the people in the long term; this is for example the case by L'Oréal, Michelin or Procter & Gamble to name a few”. [...]

[...] What's happening? Nowadays, as China has opened its frontiers to foreign investment, the FNSC has more and more relations with foreign trade unions. It does not mean that association rights and claims are on the board in the FNSC, but the FNSC more and more fear that new organisms coming from other cultures appear in the foreign companies in order to protect the Chinese employees. We have to say it, China is economically speaking very dynamic, but the democracy does not really exist: foreign companies could have a role to play and help employees having more rights by putting pressure on the FNSC to allow other form of trade unions to exist. [...]

[...] Carrefour had to train its managers and learn as much things as possible about China and the Chinese way of thinking. Regarding negotiations with Chinese business partners, foreigners have to prove humility and patience, the two most useful skills. Western managers had indeed to change their habits. They are used to be more direct but a Chinese businessman first wants to instaure a trustful relationship before really beginning the negotiation. That is why initial meetings are often more of a social occasion than a business session. [...]

[...] In fact, in China, fried chicken is not the core competency. Instead, it is the ability to manage a large restaurant chain. Regarding retail groups, the core competency seems to be this one: while offering Chinese people the features of modern retailing standards existing in developed countries, adapt to the needs of the local market. That is why big foreign chains have adapted their stores. Firstly, they had to adapt their stores' format to a new environment made up of areas situated in town centres and as a consequence in existing buildings, which is not the case in Europe where hypermarkets are situated on the outskirts of cities. [...]

[...] Most of them are implanted in Spain. Global estate of Carrefour's stores Offer Main brands % of the estate % of turnover Hypermarket Dietary and non dietary products Carrefour Hyper Champion Supermarket Mainly dietary products Harddiscount Dietary products Local shop Dietary proucts Mainly developped in France Carrefour Champion 8 à Huit Shopi Dia Maxidia ED Marché Plus Proxi Shopi Cash & Carry Mainly dietary products Promocash E-commerce Internet shopping and home deliveries Total - Ooshop (dietary) Boostore (non dietary) - Geographic distribution In 2005, Carrefour realised 47.5 per cent of its turnover in France, which remains a major outlet thanks to the high profitability of hypermarkets. [...]