Chinese Case

7/29/2019 Chinese Case

1/6

Export Marketing

1 | P a g e

Case Study:

Strangers in Strange Lands

Submitted by:

Hamza Amanullah

Hamza Shafique

Meesaq Qayyum

Sami Rasheed

Zaish Mahmood

Submitted to:

Ms. Faryal Khan

BBA IV-Section J

February 10th, 2013

Lahore School of Economics


2/6

Export Marketing

2 | P a g e

Summary

The case lists out the dilemma that Western Retail outlets (such as Wal-Mart, Carrefour and

others) face as they enter Asian markets. The case builds on the notion that these retail outlets are

not able to build on the premise of cultural differences and hence they cannot adapt themselvesto the demographics of the local markets. The paper puts forth the framework which emphasizes

of the importance of adapting to the needs of Asian consumers on part of these large retailers.

The paper is a culmination of work done on large retailers over a span of six years. The

researcher has deviated from the traditional methods of data collection and has travelled wide

and far for data collection, this has allowed the paper to develop a wider frame of reference and

have a cross-sectional analysis across countries.

The approach to the paper is ethnographic and real-life scenarios have been discussed to elicit

the happenings in daily life. From the researchers point of view, the customers obvious needs

are kept in accordance with their unspoken needs and wants. The method used results in a more

in depth understanding of culture and the resulting buying processes which are otherwise not

comprehensible.

The paper elicits the hypermarket structure being followed in Asia and sets out by explaining the

structures of stores such as RT-Mart, Tesco and Carrefour which have employed different

strategies to cannibalize each others market share. These international retail store giants not only

face competition from each other but also face stiff competition from local stores, otherwise

known as wet stores. The strategies that the stores under discussion employ are yielding fixed

results and in the consumers mind, the most important factor in making a decision as to which

store to buy from lies in the freshness of food being offered. In the researchers words, the

advantages that local stores have over hypermarkets are that the local store owners succeed in

making personal relationships with the customers (like knowing the customers names and theirprofessions) while also being easily accessible.

The researcher also differentiates the customerbuying behavior while they purchase from

these stores. The case in point is of poultry business at wet markets, poultry is brought to wet


3/6

Export Marketing

3 | P a g e

shops between 5 am to 10 am and the customer has to observe which meat is fresh and which is

old. Whereas in Tesco, the employees themselves inform the customer of the meats origin and

its freshness.

The demographics of the wet markets are also a factor to be considered, the target market may

range anywhere between a child to an older person and may be a man or a woman. The ages

typically range from 13-30 years; however problems arise when the demographic break-up of the

stores target market is not in line with its brand strategy and target marketing. The local market,

it seems is plagued by perceptions of how the West sees their consumption patterns and by how

supply side theories and demand side theories affect consumer buying behavior, However, it is

very important to keep the role of values, norms, ethics and demographics of the local market

into consideration.

The paper concludes with the finding that culture is a very important factor determining the

success of any MNC which penetrates into a certain region. Consumption of items varies from

region to region (a case in point may be of different needs of vehicles for different regions, or

different consumption patterns of fast food in different regions). However, hypermarkets have a

generally inflexible structure which renders them prone to disadvantages as compared to local

retail outlets. It is thus imperative for hypermarkets to adapt to the local market, its environment

and the values that the consumers believe in, in order to be successful in such regions.

Key Findings

This article basically talks about the great deal of difficulty that the managers of different

western retailers face in China owing to the correspondence with the local values of the country.

Researcher, through its research, has given different meanings to the same regular use products

in terms of the global market and the local market. Research from different markets including

Japan, Malaysia and largely the Muslim community have different indigenous cultures that have

strong influence on their everyday shopping as well.

The three western retailers that have been discussed in the research are Tesco, Carrefour and RT

Mart. Example for Taiwan for these retailers have been noted where Tesco focused on

cleanliness and a premium market store with many imported products, meanwhile RT-Mart


4/6

Export Marketing

4 | P a g e

emphasized more towards the local perspective i.e. the format of wet market, whereas Carrefour

positioned itself between the two.

China market is open towards the idea of wet market where most of the food related shopping

takes place. Western considers this as the messy way of shopping with unhygienic environment

and wish to make the local community shift towards the more organized way of shopping. Still

the wet markets are dominant in the culture and sales figure clearly reflects it as $14 billion sales

in wet markets as compared to $4 billion in hypermarkets. Researcher tried to embed into the

local culture in order to find out the basic consumption behavior in retail industry.

RT-Mart have greatly adapted to the local wet market culture with most of its fresh food items

displayed in bins with loud promotions. Carrefour used the hybrid strategy with both the feel of

wet market and the display of imported products and these products are continuously re-shelved

to keep them interesting, though customers feel aisle about it. Tesco, with much cleaner

environment and trained staff, exhibits the real feel of a westernized imported goods premium

store.

Poultry section of wet market is quite dominant and open as well, where many display their stalls

and slaughter the chicken on customers demand. Unable to provide fresh chicken may reduce

the price of the chicken and customers also might feel dissatisfied. Mr. Lee have competitive

edge in the market because of bringing large volume of fresh chickens in the market to stay

longer after the market has closed down.

Shoppers are also diversified in the wet market, with more grandmothers and mothers in the

earlier part of the day, whereas mothers and children are the primary shoppers in the afternoon.

Children usually the impulsive in nature when purchasing any snacks but children here

associated excitement with consumption as opposed to the western culture. Shoppers from the

age range of 13-30 years are not the usual shoppers of wet market and Mr. Lee accredit it as why

someone should shop when they cant cook. Even the ladies before marriage usually do not cook

and they are only asked to cook once they are married.


5/6

Export Marketing

5 | P a g e

Analysis

Problem- There has been a failure of Hypermarket companies in the past in East Asian markets

like China. The reason being their standardized approach and an inclination towards

globalization. Their success in setting similar store formats around the world did not work as was

the case with Wal-Mart; it had to shut down in Korea. Tesco and Carrefour did the same in

Japan.

Drivers-The failure was mainly due to the lack of knowledge of East Asian market culture and

the Hypermarkets did not consider it.The concept of Wet markets in East Asia took the lead in

customer acceptance levels due to its culturally oriented format and an emphasis towards selling

fresh items.The span of customer relationship and the level of attention given to customers in

these wet markets outweighed the internationalized Hypermarket concept. The customers also

had a sentimental association with their traditional markets.The huge Hypermarkets present a

highly organized shopping experience where product categories are set department wise and all

the product categories may be found under the same roof.On the other hand, in East Asian

markets, the shopping is more random and there is no such market format where you may like to

buy all from one place; you may be buying grocery, fresh food, household items along with

packaged goods separately. There is an emphasis on selling healthy and fresh food and therefore

the need for wet markets.

Considering other drivers of failure, the Hypermarket companies may have been misread the data

and held dissimilar opinions about the market culture in East Asia.The Hypermarkets took

themselves as a superior trend in the East Asian markets like China. They may have looked into

the changing demographics of the Chinese market like the shift of rural population to urban areas

and the rise in business class, and the interpretation followed that this was a change in the

lifestyles of people and they would prefer shopping in internationalized markets now. Sadly, this

was not the case as people still preferred going to the traditional wet markets.

Also, the definition of what is considered clean in the East Asian markets may have been

misread by the international companies who came up with their own standards of cleanliness and

kept them high. However, locals had their own preferences associated to the wet markets.


6/6

Export Marketing

6 | P a g e

Solution-

Changing economies, demographics and competition presents a challenge to hypermarkets which

see China and East Asia as full of opportunity. The profitability of these firms rests on the fact

that they have to take into close consideration the local culture and customer needs. The local

concept of freshness and wet markets has turned out to be a threat which is so deep rooted that it

gives tough competition to international giants. China is a booming economy with immense

opportunities to cater to the growing number of customers but while it is being done, local

preferences must be applied.

Therefore, the companies must undertake an in-depth analysis of customer inclination towards

freshness, customer relationships, their need for attention, their definition of cleanliness and way

of shopping in their own environment. Local preferences will have to incorporated into the

Hypermarket setups to make them a success and attract buyers.

An example from the case elicits a similar situation where Wal-Mart has taken the format of a

Wet market in its Chinese branches where loud promotions are being used, customers engage in

digging and freshness of goods is highlighted.

Chinese Case

Documents

Transcript of Chinese Case