Retail giant bows out . . .
French retailer Carrefour, active in China since 1995, has sold 80 per cent of its Chinese operations to Alibaba-backed retailer Suning.com for US$705 million, and indicated it may sell the remaining 20 per cent in the coming years. Carrefour operated more than 200 large stores in China, but sales had declined steadily since 2016. It is the latest exit of the Chinese market by a Western retailer in the last few years, following Walmart Inc. and others.
E-commerce overtaking traditional retail . . .
Carrefour faced fierce domestic competition, but it was the e-commerce wave that dealt the company the final blow. Carrefour opened a high-tech store in Shanghai in 2018 in partnership with Chinese company Tencent, which allowed various forms of payment and free delivery for online purchases. However, Carrefour could not keep up with the significant shift to online retail and shopping by Chinse consumers, a trend that favoured home-grown giants such as Alibaba’s Freshippo and JD.com.
A cautionary tale for other retailers . . .
China, with more than 700 million consumers, is the largest e-commerce market in the world, with a specific shopping culture and e-commerce landscape that needs to be fully understood by foreign retailers. The Chinese market may be too big and growing too fast for many Canadian companies to ignore, but in order to be successful, as the Carrefour story demonstrates, retail companies need more then ever to be fully aware of the local e-commerce landscape and be ready for substantial investment in order to have a successful market entry or expansion.
- Le Parisien: Carrefour quitte la Chine
- Reuters: France's Carrefour free to focus on home market after retreat from China
- Asia Pacific Foundation of Canada: Succeeding in China’s $9.4 T E-commerce market: Why culture and context matters