Retail development and internationalisation in China

China partially opened its retail sector in 1992 to foreign operations. Western retail giants have entered China since 1995. In the first decade, they expanded fast by transferring new retail formats and bringing advanced retailing methods and large capital (Coe and Hess, 2005). They captured the growing number of Chinese middleclass consumers, who were attracted by their modern formats and tailored products and services (Siebers, 2011), despite paying relatively high prices compared to urban markets. Western retailers’ growth peaked in 2004 through rapid market adaptation (Siebers, 2012). However, following full liberalisation of the retail sector in 2005 after China’s WTO entry, Western retailers’ competitive advantages weakened instead of showing the expected faster growth. Some of their business practices received criticism, e.g. Carrefour’s flouting laws and regulations and imposing illegal charges on suppliers (Siebers et al., 2015). Moreover, China’s economic growth leads to increasing consumer demands and rise of property rent. Consequently, some Western retailers divested from China (e.g. OBI; Best-Buy); some closed many stores (e.g. Wal-Mart; Carrefour); and others sold the majority of their shares (e.g. Tesco). These phenomena intensified from 2010, when internet shopping became Chinese consumers’ new preferences for seeking low prices (Siebers and Xun, 2014). To respond to these changes, existing Western retailers have implemented innovative strategies, including renovating stores and introducing online shopping experiences. Recent research shows that Western retailers apply hybrid practices in China, focusing more on the local society and consumers, learning from their market operation experiences (Siebers, 2016). Nevertheless, some of their new strategies have already failed. For example, Tesco’s new retail format–Life-space shopping centre in Qingdao, opened in 2010, was sold in 2013 due to lack of competitive advantage.

Western retailers struggle to meet the local market demands is believed to relate to their corporate social responsibility (CSR) practices. The behaviours of some Western retailers by which they deal with local suppliers and customers have exacerbated social concerns about transferring their costs to local labour and consumers, thus threatening their corporate image. For example, Wal-Mart enforced their Chinese suppliers to reduce prices for its export products due to the recent devaluation of Chinese currency. This led to social opposition by the local suppliers, because they have always been forced by Wal-Mart to provide the lowest prices, and their payments had been held for years (Liu, 2015). Wal-Mart was also fined by selling expired products, but refused to refund (Zhou, 2015). This project aims to answers two specific research questions:

(1) What are the strategies of Western retailers to respond to the latest consumer demands in post-WTO China?
(2) How do Western retailers respond to local stakeholder requests for social orientation to sustain growth in China?
The applicant is expected to take an inductive, qualitative approach to gain in-depth understanding of the research issues in both Mandarin and English.