On a global scale, Wal-Mart is a well-deserved retail leader, and its global turnover in 2002 was about three times that of Carrefour, the second largest. However, in today's China, there has been an obvious reversal. Since Carrefour opened its Chinese mainland market on 1995, it has penetrated into Shanghai, Shenzhen, Tianjin, Shenyang, Wuhan, Chongqing and other major cities, while Wal-Mart is only located in Northeast China and South China, and its momentum and influence are obviously inferior to Carrefour. According to the analysis of the insiders, the situation of these two retail giants in China is very different, no matter in market layout, format selection, logistics procurement, government public relations, or the relationship with suppliers, which actually reflects the different "personalities" of the two giants to some extent. It can even be vividly thought that Wal-Mart is more like a meek and forbearing "sheep" than the "wolf" image of Carrefour opening stores everywhere regardless of illegal operations.
With the gradual opening of China's retail industry to foreign investment, the competition between the two giants is bound to enter the hand-to-hand combat stage. Before "actual combat", analyzing their elaborate layout and "roadshow" in China market can give a lot of enlightenment to China retail industry at the crossroads. Please read this issue of Market Competition between Wal-Mart and Carrefour in China.
placement strategy
Carrefour made a strong breakthrough and Wal-Mart retreated to the city wall.
★ Judging from the timetable for the two giants to enter China, there is not much difference. 1995, Carrefour entered Shanghai for the first time, and one year later, Wal-Mart's first store also settled in Shenzhen. Although it is only one year late, so far, Wal-Mart lags far behind Carrefour in the number of stores.
★ Although Carrefour ranks behind Wal-Mart in the world, it ranks first in China. The reason for its success lies in its unique market layout strategy, such as seizing Shanghai first, instead of Guangdong and Beijing. The most direct reason is that its headquarters is located in Shanghai, which is beneficial to their national market strategy, because Shanghai's commodity assembly conditions, transportation conditions and market radiation ability were stronger than Shenzhen and Beijing at that time.
It is reported that Wal-Mart once considered Shanghai as its first choice when it entered China, but eventually moved to Shenzhen, Guangdong after negotiations with its partners failed. Professor Gu, president of Shanghai Chain Store & Franchise Research Institute, believes that this relocation has strategically made Wal-Mart lose one of the largest urban markets in China, and the middle road (Yangtze River Corridor) and (going from south to north) are the most likely strategic locations for China to make a breakthrough.
★ There is still a misunderstanding when Wal-Mart chooses to open a shop and set up its headquarters in Shenzhen: it will be regarded as a regional company rather than the largest company in the world. This geographical location has greatly affected the speed of Wal-Mart's cross-regional opening in China. At that time, most of the chain stores in southern China were small-scale suppliers, which could not cooperate with Wal-Mart in the layout of the national market in terms of concept and strength, which greatly hindered the development speed of Wal-Mart in the Chinese mainland market.
★ Compared with Carrefour, the development speed of Wal-Mart in China is really slow. Dr. Liu Luyu, Deputy Director of the Research and Consulting Department of Shenzhen Comprehensive Development Research Institute, made two feasibility studies on Wal-Mart's investment in China in 1996 and 2000. In an interview with reporters, he said that this is mainly caused by the following two reasons.
First, the operating modes of the two companies are not quite the same. Wal-Mart is completely self-operated, while Carrefour skillfully adopts the joint venture model, so Carrefour avoids many policy obstacles;
Second, after all, Wal-Mart is the biggest retailer in the world, and Carrefour is the second, but they are not in the same heavyweight, which has largely caused the rigidity of Wal-Mart's system. In order to control risks, we are more cautious when dealing with the government, so a company is approved to open one, while Carrefour's system is more flexible and even good at opening more stores by taking advantage of government loopholes.
In fact, Carrefour took vigorously developing stores as its first goal of expansion from the very beginning. According to Professor Gu, in order to complete the strategic layout in China faster than its competitors, Carrefour broke the conventional and chain operation system and adopted the practice of purchasing from stores all over the country. Although it was a risky move, it won Carrefour development time. Today, Carrefour has basically completed its strategic layout in China's coastal cities and economic center cities, which is two to three years faster than Wal-Mart and Metro. This time, it won Carrefour time to adjust and integrate its management system and system.
Format selection
Carrefour was suppressed by "hypermarkets" and Wal-Mart actively localized.
★ After Carrefour entered China, it mainly adopted the main format of large supermarkets-hypermarkets. This bargain-hunting shop, which is characterized by low prices every day, is very suitable for China, a country in a period of rapid development. It can be said that the cheapness of hypermarket format has suppressed most of the department stores in China retail industry, and comprehensively restricted the newly developed small and medium-sized supermarket chains in China, which is the success of Carrefour.
★ This format is actually a killer of Wal-Mart in the world. However, Wal-Mart initially adopted a format called Shopping Plaza in China. Professor Gu commented that this format should be said to be very suitable for Shenzhen, a young modern city with high consumption income and new ideas. In addition, the department stores in Shenzhen are underdeveloped, and most supermarkets are small and medium-sized supermarkets. Wal-Mart's shopping plaza will have many competitive advantages, but this advantage has been suppressed by Shenzhen Wanjia. So that Wal-Mart basically stopped the shopping plaza mode and turned to learn from its competitor Carrefour. Only by changing from a shopping mall to a hypermarket can we not say that Wal-Mart has fallen behind again.
As a matter of fact, Wal-Mart has been adjusting its localized business model in the choice of business format to constantly adapt to the China market. Mu Jianwei, marketing director of Fuji Cyclone, believes that the newly opened stores of Wal-Mart and the first stores opened in China have changed greatly. The scope of adjustment includes not only the product structure, but also the mode of operation. For example, Wal-Mart has set up counters in newly opened stores in Shenzhen Overseas Chinese Town and Dalian, while foreign Wal-Mart stores have no counters; Another example is the transformation to a community store. At present, Wal-Mart implements multi-formats simultaneously, basically forming a pattern with large supermarket stores and member stores as the "outline" and small but many community stores as the "target".
It is reported that Wal-Mart will no longer try to sell folding ladders or soy sauce to customers in China for one year. Instead, it began to sell roast chicken in Zuo Zuo at the price of 1 USD, held a watermelon eating contest, and taught salespeople to vault Carena (a modern dance) in a newly opened store. These actions have received positive response from customers, which also shows the initial results of its localization efforts from another angle.
Symbolic logic system
Carrefour borrows other people's logistics to promote the speed of opening stores, while Wal-Mart has fewer stores and can't replicate the successful logistics model.
★ Wal-Mart's success in the world is mainly due to its perfect combination of information technology and traditional modes of transportation. However, due to China's policy restrictions, this successful model has not been replicated. Liu Luyu believes that Wal-Mart has not solved the logistics problem in China, mainly because there are few stores and its logistics advantages can't be brought into play.
★ Xu Jun, the public relations director of Wal-Mart China, also confirmed this in an interview, but this is obviously a question of laying eggs first or laying eggs later: there are no large distribution centers, mainly because there are few stores, which cannot support the establishment and operation of large distribution centers.
★ Under the current circumstances, Wal-Mart takes the distribution center before opening a store in China, that is, the distribution center is built first and the stores are developed later. Professor Gu believes that this model will definitely bring higher operating costs in the early stage of China's development, and it will also restrict the development speed of cross-regional stores. From the successful experience of chain enterprises in China, we can see that only by keeping the development speed of distribution center slightly behind the development speed of stores and making the cost of distribution center always digestible in the total business volume of stores can enterprises continue to grow in profits.
★ Comparatively speaking, Carrefour lags behind in the construction of distribution system and information system. It is reported that Carrefour has no plans to establish a distribution system in Chinese mainland so far, and the development and establishment of computer systems have lagged behind its competitors for several years. Under such circumstances, Carrefour adopts the way of combining supplier logistics system, that is, fully relying on supplier logistics system, which can greatly reduce its own operating costs, and at the same time, it can cooperate with the opening of stores in different regions to organize the supply and distribution in time, thus winning the development speed in Chinese mainland market.
★ Regarding the advantages and disadvantages of the logistics modes of the two domestic retail giants, Professor Gu believes that the development competition of retail enterprises is the competition of the number of stores, because the geographical location of stores is a scarce resource, and whoever wins this scarce resource first will get the opportunity for development. In this sense, Carrefour's logistics model aims at the development speed of stores, while Wal-Mart's logistics model limits its development strategy.
Supplier relationship
Carrefour transfers risks to suppliers, and Wal-Mart transfers risks to suppliers.
★ The recent incident of Shanghai roasted seeds and nuts vendors challenging Carrefour shows that the relationship between Carrefour and its suppliers is not harmonious. In fact, the tense relationship between Carrefour and its suppliers has a long history, and there are many obvious disputes between the two sides. For example, Carrefour relies too much on suppliers in order to save logistics costs, and even increases the delivery frequency while reducing the minimum order quantity of stores. In this way, although Carrefour's inventory has decreased, the logistics cost of suppliers has increased.
★ It is reported that some Carrefour stores are still accustomed to passing on countless indicators such as price reduction losses, losses, turnover and gross profit margin to suppliers, which means that the trading conditions negotiated between suppliers and headquarters will be attached to the stores, because Carrefour is the largest and suppliers can do nothing; In addition, it is reported that Carrefour's recent regional procurement policy has also changed suppliers from one-to-one mode to one-to-many, which undoubtedly increased the operating costs of suppliers and led to their complaints.
★ Unlike Carrefour, Wal-Mart always tries to establish a good development relationship with suppliers (such as the relationship with Procter & Gamble) to reduce the operating costs of suppliers. According to Mu Jianwei, in 2002, Wal-Mart announced to its suppliers in China that it would not charge "entrance fees", which immediately won applause from suppliers in China and surprised colleagues in China. In an interview with reporters, Liu Luyu believed that the relationship between Wal-Mart and its suppliers has been very good, mainly because Wal-Mart realized that its information advantage was based on suppliers, so Wal-Mart was more willing to give more market profits to suppliers and maintain good cooperative relations with them.
government relations
Carrefour is on the rampage and Wal-Mart is decent and elegant.
In the retail industry, Carrefour was warned by the government for opening stores in violation of regulations, which is well known. As early as 1999, the State Economic and Trade Commission issued a document in conjunction with relevant departments, ordering Carrefour to sell at least 35% of its shares in two wholly-owned supermarkets in Northeast China to a China company. After that, this model almost became Carrefour's response to other illegal supermarkets in China. According to a person familiar with Carrefour, "In fact, Carrefour took 35% of the shares of 27 branches as a bargaining chip and had arduous negotiations with the government departments in China before finally gaining the right to exist in China."
In fact, Carrefour did a poor job in government public relations for a while. Gu believes that this is mainly because Carrefour, in order to implement its strategic plan in China, ignored the legal and policy restrictions of the China government and played some "edge balls" between the central government and local governments. This practice angered the central government and finally included it in the rectification. He reminded Carrefour that doing business in China and doing a good job in public relations is an important part of localization.
Comparatively speaking, Wal-Mart's government public relations seems to be very successful. Some people even think that Wal-Mart is more like a tame sheep than Carrefour's unruly "wolf" image. Liu Luyu believes that the relationship between Wal-Mart and the China Municipal Government has been handled very well, which is actually a very strategic card of the China Municipal Government, that is, cross-industry procurement. Compared with Carrefour's "rampage" approach, this card is more like a clever killer. Because the annual purchase volume of Wal-Mart in China is particularly large, only 1996 has reached US$ 2 billion. This huge export volume is obviously a good thing for the China government, and in return, Wal-Mart has obtained the permission to open a store "gracefully", unlike Carrefour, which is always given a "yellow card" warning by the government.
Close combat
Although wolves are terrible, sheep are not docile.
★ No matter what means of competition is adopted, there is no doubt that Carrefour has become the leader in China's retail industry, which can be said to be the result of its "fierce" market. In the eyes of a considerable number of people, the global leader has not shown the king's demeanor in China, but this is only a phased situation. Experts remind that wolves are not terrible and sheep are not docile.
After years of twists and turns, Wal-Mart finally landed in Shanghai and Beijing this year. It is reported that Wal-Mart will soon establish a northern logistics distribution center in Tianjin. Judging from the current situation, Wal-Mart is demonstrating its core skills in distribution. According to the person in charge of the Domestic Trade Bureau of the State Economic and Trade Commission, Wal-Mart has been allowed to open more than 30 stores in China, and has actually opened 22 branches in 9 cities. Huang Hai, director of the Trade Market Bureau of the State Economic and Trade Commission, believes that Wal-Mart has initially occupied two major markets, namely, the southern markets such as Shenzhen and Dongguan in Guangdong and the northeastern regions such as Changchun, Dalian and Shenyang. With the successive layout of Xi, Beijing and Shanghai, Wal-Mart has formed a triangular pattern in China, and will start its rapid strategic expansion based on the east.
★ Carrefour can't sit still. After completing the basic strategic layout of Chinese mainland market in previous years, one of its main trends is to cooperate with domestic real estate developers to further expand. It is reported that Carrefour has reached a strategic partnership with Beijing Zhongkun Group in real estate. According to the agreement between the two parties, Carrefour will enter the real estate projects developed by Zhongkun Group by "singing with women" and intervening in advance, that is, Carrefour stores will appear wherever the real estate projects of Zhongkun Group are developed. At the same time, the Wanda Shopping Plaza jointly built by Dalian Wanda Group and Wal-Mart also settled in Changsha. It is reported that this new format advocates the consumption concept of one-stop shopping, implements misplaced operation and complements each other's advantages, which is a typical representative of the international trend of "central head office+indoor pedestrian street". Liu Luyu believes that the driving force of this cooperation between retail giants and real estate developers cannot be underestimated.
With the intensification of competition between the two retail giants in China, the local retail industry in China is also facing unprecedented challenges, including more foreign retail enterprises. According to statistics, by the end of July 2003, Wal-Mart had opened 27 branches in China. Within five years, the Group plans to open 50 stores in China, and purchase goods worth more than US$ 654.38 billion in China every year. Carrefour has 39 stores, and plans to open 10 stores in China every year from this year, and has established a global procurement base in Wuhan, purchasing about 10 billion US dollars in China every year; German Metro has opened 17 stores in China, and plans to open 6 stores in China this year and 40 stores in five years. French Auchan plans to open 2 1 store in China before 2004; Japan 7- 1 1 plans to open 500 stores in Beijing in the next five years. All these have brought great competitive pressure to local enterprises, and the "super" formation of Shanghai Hai 'an Baili is considered by the industry as one of the countermeasures for local enterprises.
However, it is inevitable that the fierce competition will lead to a decline in the overall profit rate of the retail market in China. Although Carrefour, which owns 39 large supermarkets in China, claims that its net sales in China reached $6,543.802 billion last year, according to Merrill Lynch's report, almost all foreign-funded retail enterprises in China are at a loss. If this recession continues, no matter whether it is a "wolf" or a "lamb", there is no doubt that whoever can persist in the end will become the winner.
Comments:
It is only a matter of time before a "sheep" becomes a "tiger"
Wal-Mart, the world's largest retailer, actually got the license to enter the retail market in China as early as 1992, but it was not until 1996 that it opened its first store in Shenzhen. Compared with Carrefour's crazy expansion, Wal-Mart seems to have lost market opportunities, but from another perspective, we have to admire Wal-Mart's "forbearance" spirit. First of all, Wal-Mart showed the boss demeanor of "obeying the rules of the game". No matter how good the city is, as long as the government's approval is not enough, they will not open stores, which is in stark contrast to Carrefour being forced by the government to give up its shares. Secondly, it is its long-term development strategy. They think it is more important to integrate local suppliers than to open stores quickly, because no matter how many stores have no good goods to support logistics and distribution, they will eventually collapse from the foundation. To this end, Wal-Mart put the establishment of procurement system and logistics system before opening a store quickly. Although the advantages of the current procurement system and logistics system have not been fully reflected, their strategic layout is correct.
At present, Carrefour, a leading domestic enterprise, may have realized the advantages of Wal-Mart, so it takes "fast" and "fierce" as its defense weapon. "Fast" is reflected in the speed of opening a store, and "fierce" is reflected in the desire to make money. But "fast" and "hard" have side effects. At present, Carrefour's dealers have meager profits in the store, but they dare to speak out, which is very easy to "escape" and "defect". With the gradual acceleration of Wal-Mart's opening of stores, these dealers will soon change hands. Wal-Mart's interests are ahead, and it is only a matter of time before a "sheep" becomes a "tiger".
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