Compare and contrast the strategies of Carrefour and
Walmart in the Chinese market
Although the whole world has been affected by global recession, China’s economy still grows in a rapid rate compared with other countries’. Furthermore, the expansion of China’s retail market has attracted world’s largest retailers, Walmart and Carrefour, to pile in. The expansion strategies of the two global retailers seem to play a crucial role in the competition in China. Thus both similarities and differences of strategies are worth considering and will be respectively analyzed in the essay.

One of the most significant similarities of Walmart and Carrefour’s strategies is that both of them learn about the diversity of regions and customers. Ed Chan, the Walmart China’s CEO, pointed out that not only income level, but also customer preferences were affected by the regional diversity (McKinsey Quarterly, 2009). It suggests that from coastal area to inland regions, the economy is less developed and the income level is accordingly lower. As a result, customer preferences vary from the eastern to the western part of China (McKinsey Quarterly, 2009). Similarly, Carrefour treats coastal and inland customers respectively to adapt to region differences in China. For instance, live fish is displayed to customers in fresh area but frozen fish is sold to people in vast regions according to the diversity of their preferences (Child, 2006).

Another similarity is that in addition to coastal cities, both retailers have expanded into inland regions and smaller cities which are less prosperous. The Economic Times (2008) stated that Walmart has opened a store in a less prosperous city in Henan province and Carrefour has opened one in Urumqi, a city in the westernmost area in China. The article seems to show that in view of the near saturated market in the first-tier cities such as Beijing and Shanghai, both Walmart and Carrefour expand to cities in central and western regions and take every opportunity to make profits.
The third similarity is that Walmart and Carrefour have opened energy-saving stores in China to save the electricity cost (Anon, 2009). By applying energy-saving technology into chain’s stores in China, Walmart uses natural light instead of electricity, thus saving over half of electricity cost (Anon, 2009). Moreover, Carrefour also has invested a large sum of money in saving energy at its chain stores and its investment was recovered in two years’ time after the first energy saving store was opened (Anon, 2009). It indicates that the strategy of eco-friendly behavior not only cuts down the electricity cost in long term, but also has a positive effect on protecting the environment.

Despite the similarities, there are diverse differences between strategies of Walmart and Carrefour in the Chinese market. One of the significant differences is that Walmart relies more on central distribution center in China while Carrefour prefers to cooperate with local distributors in different regions. Recently Walmart has constructed the enormous distribution center for deliveries (Anon, 2007). However, Carrefour regards flexibility as a crucial aspect when it opens a store in a new place. Therefore, instead of building a central distribution center, Carrefour uses local networks and tries to build an advanced distribution platform and systems (Child, 2006). Nevertheless, based on the fact that Carrefour already has made profits while Walmart has not, it appears that the strategy of Carrefour might be more successful than that of Walmart (Anon, 2007).

The second difference between strategies of Walmart and Carrefour in the Chinese market is that Carrefour uses organic expansion strategy while Walmart joins organic development and large-scale acquisitions together (Moreau and Raphael, 2008). Moreau and Raphael (2008) stated that by using the organic expansion strategy, Carrefour achieves rapid organic growth annually. Walmart also increases its Chinese revenues. However, different from Carrefour, Walmart not only controls the stake of Trust-Mart but also plans to open more new outlets (Moreau and Raphael, 2008).

There is another strategy difference between Walmart and Carrefour. Walmart expands in Chinese market as hypermarkets, which sell a wide range of goods (Moreau and Raphael, 2008). Nevertheless, Carrefour applies a multi-format strategy, which opens small stores under the Dia chain and sells goods in a low price in order to create a new pattern of expansion (Moreau and Raphael, 2008). However, because of the fact that the amount of these goods cannot be adequately offered together with low price, the Dia chain does not grow massively (Moreau and Raphael, 2008).

A final difference is that in terms of Chinese culture, Carrefour adapts to local culture more effectively than Walmart. This can be proved by giving the fact that Carrefour does not sell pork meat in Urumqi with regard to the eating habit of Muslim people (Moreau and Raphael, 2008). Compared with Carrefour, Walmart prefers to act in an American way. For instance, Walmart provides a variety of private labels but receives a low acceptance among Chinese customers (Moreau and Raphael, 2008).

To conclude, there are similarities and differences of strategies between Carrefour and Walmart in the Chinese market. Both of them share more than one similarity such as learning about the consumers’ diversity, expansion into less prosperous regions and energy-saving stores. However, Carrefour and Walmart also differ in various respects especially the distribution and delivery issue. It seems that in terms of expansion strategies between Carrefour and Walmart, both similarities and differences play a crucial role in the competition in China. Perhaps in the future two global retailers need to update strategies in response to new conditions. It is probably difficult to see which of the retailers will conquer the China’s large but competitive retail market in long term.

References
Child, P.N.(2006) Lessons from a global retailer: An interview with the president of Carrefour China, The McKinsey Quarterly [Online]. Available from: https://www.mckinseyquarterly.com/Lessons_from_a_global_retailer_An_interview_with_the_president_of_Carrefour_China_1799 (Accessed: June 2006).

Food & Beverage Online (2009) Tesco, Carrefour and Wal-Mart go green in China [Online]. Available from: http://www.21food.com/news/detail22071.html (Accessed: 11 Jun 2009)

Moreau & Raphael (2008) Carrefour and Wal-Mart's differing expansion strategies in China, The Retail Digest [Online]. Available from: http://www.thefreelibrary.com/_/print/PrintArticle.aspx?id=213856460 (Accessed: Mar 22, 2008)

Supply Chainer (2007) Walmart and Carrefour in China: Whose strategy is better? [Online]. Available from: http://www.supplychainer.com/50226711/walmart_and_carrefour_in_china_whose_strategy_is_better.php (Accessed: February 24, 2007)

The Mckinsey Quarterly (2009) China’s retail revolution: An interview with Wal-Mart’s Ed Chan [Online]. Available from: https://www.mckinseyquarterly.com/Chinas_retail_revolution_An_interview_with_Wal-Marts_Ed_Chan_2459 (Accessed: October 2009).

The Economic Times (2008) Carrefour, Wal-Mart battle for market share in China [Online]. Available from: http://articles.economictimes.indiatimes.com/2008-02-21/news/28456873_1_wal-mart-vice-president-wal-mart-battle-retail-giants (Accessed: Feb 21, 2008, 08.41am IST)