TESCO’S EXPANSION STRATEGY IN CHINA
TESCO is a general grocery and merchandise which is had many branches around the world with headquarter in UK. It was founded by Sir Jack Cohen in 1919.
IN 2004, TESCO opened their branches in China and has merged with Ting Hsin, one of the dominant hypermarket in China. Co-operate with local market like Ting Hsin helps Tesco to learn valuable lessons about the markets. UK and China, there are wide differences between the regions and towns. In here, Tesco got knowledge about the conditions of the market (the consumers taste, store location).
China has been attracts the foreign investors to set up new business in China. One reason why Tesco started new stores and planned to expand their outlets in china is because there is less government scrutiny and restriction in consumer goods industry. Second, China population is more substantial than UK population and most of them are getting richer for some decades. There was an increase in Chinese annual income which is leads to an increase in the consumption level of goods such as foods, day-to-day goods (shampoos, soaps, detergent).
Tesco is rolling out hypermarkets in the suburbs and small TESCO Express stores in city center. They sell products to more than 4million customers per week and 6million customers are attracted to be become TESCO club members. It also built large distribution centers in order to cut down the suppliers’ price and increasing efficiency by using computer systems to operate the supply chain.
However, there are some problems facing by Tesco in operating their business in China. First, most of the Chinese people are not easily discouraged meaning that they would not give up anything without a fight. It can be seen as the local stores are very competitive which leads the level competition might be high in this case. Secondly, Tesco might find difficulties in competitive pricing with the local retailers as there is greater government backing for the...
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