Encounter "Chinese Characteristics" &Nbsp; How To Break Through Foreign Retail

2011 October is a troubled time for WAL-MART.

Chongqing's "green pork incident" and China's president Chen Yaochang took the blame and resigned the retail giant at the top of Fortune 500 to the forefront of public opinion.

There are even comments that foreign retailers have encountered the "ceiling" of development models in China.

And at the end of November, in China.

In the face of the current Chinese retail market with more than 7 trillion and 500 billion yuan, foreign retailers are becoming more and more confused. WAL-MART, Carrefour, B&Q, best buy and so on have met with acclimatization in different aspects and degrees.

This can not help us.

In my book The China Strategy published last year, I put forward my view.

Multinational companies operating in China have made a common mistake. They generally believe that they can succeed in copying foreign products, services or business models to China, but there are many cases of failure.

For those giants who want to share a share in China's one billion consumer market, copying their business models and successful experience abroad is often not enough to become a patron saint of their success in the Chinese market, while overmatching the characteristics of the Chinese market and even some negative characteristics will also bring potential impacts on China's business and even global brand reputation.

Carrefour, which entered China in 1995, has 30 stores in 17 cities throughout the country when the retail industry was liberalized in 2004.

At the same time, Carrefour also changed from the initial purchasers, earning price differentials and the 3 month mode of accounts financing to the single store part procurement, the remaining suppliers to lay the goods, the entry fee, the promotion fee, the post sale settlement, and the account period extended to more than 5 months. This is a popular business mode of Chinese chain retail enterprises.

In the same period, WAL-MART, which had a turnover of nearly 20 million yuan per carpool in the same period, also took the form of charging in 2007 after replacing CEO in China.

This easily stressful supplier - store relationship in the decentralization of the procurement authority, easily leads to quality problems caused by management loopholes and shoddy products.

However, there is a structural contradiction between the growth of operating costs and the poor stability of talents.

* the recent WAL-MART "green pork incident" is a manifestation of management loopholes in the large and single store purchasing mode of foreign chain retail enterprises.

It is difficult for multinational chain enterprises to bring their core competitiveness in the global market to China, which is rooted in the practice of local businesses, but more or less adopts the Chinese mode.

In the United States, a proven procurement model has been adopted in China for various modes of entry fee or promotion fee. This is caused by three factors: first, the domestic channel business has low cost control capability based on extensive growth, low unit area sales and lack of supply chain management capability, leading to the domestic channel business can not form a good price difference; second, the proportion of chain channel sales accounts for a relatively high proportion of retail sales, and many categories of household appliances exceed 80%, which results in poor bargaining power of suppliers. Third, the price sensitivity of consumers is high, leading to channel manufacturers must bind manufacturers to continue to promote profits.

At the same time, some business ideas of foreign retail enterprises are rarely applauded in China.

Take WAL-MART as an example, its advocacy of "everyday low price" is constantly challenged by various promotional and profit making activities.

It is difficult for WAL-MART without scale to play its global sourcing and distribution supply chain management advantages.

Another concern is that in the United States, Procter & Gamble and WAL-MART have pioneered the collaborative management of supply chain. The two sides can share data and connect information systems to make forecasting and replenishment more efficient, thereby reducing the cost of comprehensive operation, increasing the response speed to customer demand, and enhancing customer satisfaction. However, it is difficult for China to carry out this advanced mode.

At present, the attention of chain retailers in China is still concentrated on the control power of channels. Meanwhile, this "P & G WAL-MART" mode requires both channel providers and suppliers to have strong supply chain management capabilities. Obviously, many domestic manufacturers still lack this capability.

The supply chain collaborative management mode is for the development trend of the retail industry. We are glad to see that Chinese enterprises such as Suning's ERP system have been opened to suppliers, and Samsung, Haier and other manufacturers can track the sale and inventory of their products at any time.

If retailers and suppliers can form such good cooperation, win-win is only a matter of time.

When dealing with local suppliers, foreign retailers are more likely to establish trust relationships.

China's retail market is huge and complex, and competition is fierce. It is difficult for foreign capital enterprises to apply their successful business models overseas to China.

This set up a Bamboo Wall for foreign retailers. How to create their own value in accordance with the characteristics of different regions and different consumers in the Chinese market while maintaining their core competitiveness will become the core issue for foreign chain enterprises to win China and win the future.