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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 193

China Business Intelligence No. 193

Samsung Economic Research Institute Beijing Office

Apr. 15, 2011

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Elimination of regulations on foreign retailers and the government policies to boost domestic consumption raised the growth potential of the retail market in China. Despite such changes, a large number of global retailers and distributors closed their stores in China. Home Depot, consumer electronics retailer Best Buy and the toy company Mattel (maker of the famous fashion doll Barbie) either closed some of their stores or withdrew entirely from the Chinese market.

The biggest reason is their failure to adapt to the local environment in terms of distribution system, revenue model and culture. Best Buy's "Instant payment" system led it to loss of its price competitiveness and its display based on the function and characteristics did not satisfy consumers and suppliers. Home Depot's "Do-it-Yourself" style promotion did not work well in China while Mattel failed to recognize that Chinese parents want "edutainment," instead of simple entertainment from toys. To succeed in China, Global companies need to prepare thoroughly before they enter the market.

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