Tesco in China

4816 WordsMar 18, 201020 Pages
TESCO AND THE SUPERMARKETIZATION OF CHINA AN ANALYSIS OF THE CHINESE RETAIL INDUSTRY AND TESCO’S STRATEGIC POSITION WITHIN IT Prepared by: Martin Witthoeft Module Title: Strategic Management Module Leader: Graham Webster Module Code: BC315017S Academic Year: 2008/9 Semester: One Level: 3 Submitted: 17 December 2008 Table of Contents 1. The Supermarketization of China ..................................................................................... 1 1.1. 1.2. China - Land of Opportunity ....................................................................................... 1 Tesco on Course of Expansion ..................................................................................... 1 2. Part 1: Analysis of…show more content…
Examples of the French hypermarket Carrefour, that ignored or bent the rules and was not punished for it, illustrates that China does not see a need to restrict the development of this industry (Jones, 2004). • MODERNISATION: Local governments are shutting down the traditional street markets (so-called wet markets) and convert them into supermarkets. The aim is to expand the retail networks of chain supermarkets into China’s western provinces (Gale & Reardon, 2004). 2 • OPEN MARKET: Since 2001 the Chinese retail market has been open to foreign multinationals due to China’s entry into the WTO. Only one third of the companies in China are still state controlled (Economist, 2008). II. • Economic ECONOMIC GROWTH: GDP growth is expected to drop from 11.9 per cent in 2007 to 8.2 per cent in 2012. However, domestic demand is to remain strong in the next five years as consumption will rise due to overall wage growth (Economist, 2008). • TAXATION: The rate of corporate income tax in China is 25 per cent. There are however special tax rates available for companies which are investing in preferred sectors and regions, e.g. the Western provinces (Economist, 2008). • SUPPLIERS: Since most of the fresh produce originates from China, it is essential to find local suppliers able to provide goods according to international quality standards (Jones, 2004). III. • Social

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