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Walmart and Carrefour experiences in China: resolving the structural paradox

Walmart and Carrefour owe much of their success to lean retailing, a practice synonymous with standardization. When Walmart and Carrefour entered China in late 1990s, the government still did not allow foreign-owned business, so these corporations needed to establish Chinese/foreign joint ventures, with the Chinese partner holding a majority share, often 51%. Initially the government only allowed foreign investors to operate retail joint ventures in its first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, cities with the highest incomes, largest populations and largest GDPs.Both firms have adopted a low price strategy, just as they have done in their home markets and elsewhere in the developed and developing world. Whereas Walmart mainly operates hyperstores, Carrefour, in addition to its hyper stores, owns or franchises thousands of convenience stores.Walmart and Carrefour have struggled to deliver on their almost legendary lean retailing abilities. They have had a variety of development, procurement and distribution problems which have negatively affected standardization. The study has identified key standardization and localization issues faced by the two leading global retail MNCs in China: partnership alliances, under-developed infrastructure.This research suffers from two main limitations. First, they relied primarily on secondary sources for information. Although they did conduct interviews with several of Walmarts and Carrefours suppliers, the information obtained was not sufficiently comprehensive to stand on its own. Second, the information obtained is of limited reliability, China remains relatively secretive about its markets and a free press and independent academy is just beginning to emerge.