Multinational Retailers seek ways of expanding abroad. They search for markets, products to sell, cheap labour or resources. Several foreign markets have been served so far but only recently, China was discovered as future marketplace for foreign retailers.
Like others, the German based METRO Group seeks expansion there. They weigh the pros and cons and finally adopt FDI as their foreign market servicing strategy as it seems to meet their philosophy of doing business abroad best.
Table of Contents
1 Introduction
2 China – The Global Domestic Market
2.1 Background Information
2.2 The Chinese Retail Market
2.2.1 Market Development
2.2.2 Market Profile
2.2.3 The Rural Retail Market
2.2.4 The Retail Style Development
2.3 Existing Problems
2.4 The Competitors
2.4.1 Wal-Mart
2.4.2 Carrefour
3 METRO Group – The Company
4 Modes of Entry
4.1 Exporting
4.2 Licensing/ Franchising
4.3 Foreign Direct Investment (FDI)
4.3.1 Foreign Founded Enterprises
4.3.2 Processing and Assembly Agreements
4.3.3 Compensation Trade
4.3.4 Joint Ventures
4.3.4.1 Equity Joint Ventures
4.3.4.2 Contractual Joint Ventures
5 Recommendation for a Foreign Market Servicing Strategy
6 Summary
Objectives and Topics
This report investigates foreign market servicing strategies (FMSS) with a primary focus on the expansion of the German retail giant METRO Group into the Chinese market. It aims to evaluate the advantages and challenges of various entry modes within the context of China's unique economic and legal environment.
- Analysis of China's economic and retail market evolution.
- Identification of entry barriers and competition from retailers like Wal-Mart and Carrefour.
- Evaluation of different foreign market entry strategies, including FDI and joint ventures.
- Strategic recommendations for the METRO Group's expansion.
Excerpt from the Book
2.1. Background Information
The years after the Second World War became one of the most isolated times in Chinese history in an economic sense. Because of the strict communist orientated governmental policy and its attitude towards capitalist countries. China didn´t play an important part in terms of being attractive to foreign companies. Thus, the analyse will focus on the reform period initiated at the end of the 1970s.
It was introduced under the leadership of Deng Xiaoping who launched a package of reforms that sought for radical changes in both the domestic economy and the relationship to the world economy and its global institutions. China's productive forces have witnessed immense growth since that. Its comprehensive national strength has grown rapidly.
Especially China's industrial sector has witnessed rapid growth. In 1998, the total industrial output value was increased by 8.9% over 1997.
China has forged trade relations with more than 220 countries and regions. On the world economic stage today, China has become a well-recognised political and economic power that plays a vital role in international affairs.
Summary of Chapters
1 Introduction: Provides an overview of China's emergence as an economic power and outlines the scope of this report regarding foreign market servicing strategies for the METRO Group.
2 China – The Global Domestic Market: Examines the background, growth, and development of the Chinese retail sector, including its main competitors and current problems.
3 METRO Group – The Company: Profiles the METRO Group as an international retailer and highlights its operational structure and market position.
4 Modes of Entry: Details various methods for entering foreign markets, such as exporting, licensing, and different forms of foreign direct investment.
5 Recommendation for a Foreign Market Servicing Strategy: Offers strategic advice for METRO's continued expansion in China based on identified market opportunities and challenges.
6 Summary: Concludes the report by highlighting the growth of foreign retailers in China and the changing nature of the Chinese retail market post-WTO entry.
Keywords
Foreign Market Servicing Strategy, METRO Group, China, Retail Market, Foreign Direct Investment, FDI, Joint Ventures, Wal-Mart, Carrefour, Exporting, Economic Reform, World Trade Organization, Retail Outlets, Market Expansion, Multinational Corporations.
Frequently Asked Questions
What is the core subject of this report?
The report focuses on foreign market servicing strategies used by multinational companies, with a specific case study on how the German retailer METRO Group approaches expansion in China.
What are the primary themes discussed?
The paper covers the development of the Chinese retail market, the competitive landscape involving global players, different modes of international business entry, and the regulatory challenges of doing business in China.
What is the main objective of the research?
The objective is to identify the pros and cons of expanding into the Chinese market and to propose an effective servicing strategy for the METRO Group to establish and grow its presence.
Which methodology is employed in this study?
The report utilizes theoretical approaches derived from standard international business textbooks and secondary literature, including government reports, corporate annual reports, and economic outlook publications.
What does the main body cover?
It provides an in-depth look at China's economic history, the structure of the retail industry, a comparative analysis of entry modes like FDI, and specific profiles of key retail competitors.
Which keywords best characterize the work?
Key terms include Foreign Direct Investment (FDI), METRO Group, Chinese Retail Market, Joint Ventures, and International Market Entry.
Why did METRO choose a partnership strategy in China?
Due to current Chinese business laws that favor or require local partnerships, METRO established alliances to successfully navigate the regulatory requirements and operate within the local retail market.
How do Wal-Mart and Carrefour differ from METRO's strategy?
While Wal-Mart and Carrefour focus on mass-market expansion, METRO has primarily pursued a strategy tailored to small and medium enterprises, initially focusing on the Yangtze River delta to avoid direct, fierce competition.
- Quote paper
- Thorben Schenk (Author), 2004, Foreign Market Servicing Strategies - the METROGroup in China, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/28470
