Investigation On Retail Internationalization And Indemnificatory Policy Of Chinese Retail Enterprises

Since China joined the WTO, the retail market has been opened up to global retail enterprises at the very early stage. Especially after Dec.11th,2004, the retail market has been wholly opened to abroad. All the restrictions aimed at global retail enterprises on real estate, numbers and share proportion have been cancelled, which made more and more global real enterprises marched in Chinese market at a very fast pace. All these changes had huge impact on Chinese local retailing business. According to the statistics from CBRE in 2009, the internationalization of Chinese retail market has been ranked No.6 in the world, leading USA, Japan and Singapore etc. In the report of retail market potential assessment from A.T. Kearney Inc. in 2010, China was the Top 1 potential country among 30 emerging economy entities. It showed that the retail internationalization has been expanded deeper and wider in China.Under this condition, there are two priorities for Chinese retail business. One is to compete with global enterprises in local market and build up local retail competition. The other is to devote to internationalization process, developing retail business in oversea markets. The latter one showed to be more important under the background of liberalization of international trade and economic integration. It is critical for Chinese retail enterprises to target oversea market and realize international operation. Therefore retail enterprises will come to a higher level with scale economy. It is very important to set up Chinese retail s internationalization operation theoretical system to have deeper investigation on the topic of oversea expansion under this condition. However, international practice is totally new topic for Chinese retail enterprises with few theories support. That is the reason why we need to investigate the retail theories in western developed countries, combine it with local situation and take the initiation. All these achievements will provide a set of guidance for practice.This paper indicates that the Chinese local retail enterprises should proactively start the international operation by benefiting MFN treatment after joining the WTO as soon as the requirements are ready. They should improve the competitiveness by right market selection, entry method and expertise transfer. The paper identifies the process and mechanism of retail business multinational transfer, which provides a blueprint for international operation strategy. This article also establishes the entry areas and process of international market selection and comes out with related entry methods and expertise transfer strategy. It offers a valuable guidance for Chinese retail enterprises oversea expansion, which also requires more and stronger policy support from Chinese government and social communities. Therefore retail enterprises will get more information from key markets, proper financial support, better legal and financial environment and favorable tax, trade and insurance policies. All these supports will ensure Chinese characteristic retail international operation pattern will accelerate the growth of the national economy in a better and faster way.There are seven parts in this paper. Below are the abstracts of each part:The first part is introduction. It mainly introduces the investigation background, objectives, key concept definitions, investigation framework, investigation methods and innovations.The second part is literature review. The review of retail internationalization was started from the evolution of theory and practice. Then it introduces the details of the key issues of retail internationalization globally and points out the current situation of theory investigation with insufficiency and blankness, which is the foundation for future research.The third part is about current internationalization status and the investigation of the necessity and feasibility of Chinese retail international operation. The necessity part is about the internationalization motives research, which analyzes in the views of push and pull and stresses special effects that retail internationalization has on Chinese economy development. It is also the special part of Chinese retail e internationalization motives. As for the feasibility investigation, this paper started from the case study of DTH supermarkets in Canada. It reinforced the inborn market advantages and experience reapplication strengthens in Chinese retail internationalization development. It also highlights the external and internal advantages of Chinese retail international operation based on the analysis of feasible market and method selection.The forth part is the core of this paper. This part is to help Chinese retail enterprises find out the solution for internationalization strategy including oversea market selection, entry method and expertise transfer.Retail enterprises'oversea market selection is not only affected by its own advantages but also affected by local market status, infrastructures, policies, and culture and geography gap between China and host countries. Based on the data from 40 countries, this paper calculated the ENDX for the alternative areas for retail enterprises. The results show that the final decision depends on the different development stage. The development path is as below:Stage 1:Prefer USA, Japan, Korea, Singapore and two administrative zones in China as the first priority with ENDX close to or above 0.5.Stage 2:Prefer UK, Germany, Holland, France, Canada and Australia in a long distance with ENDX close to or above 0.4 as the second priority.Stage 3:Prefer China surrounding areas and Asia pacific countries with less purchasing power but in a short distance and few culture conflicts.Stage 4:Choose Africa and North American countries carefully.The entry methods of oversea markets include franchise, strategy alliance, joint venture, sole proprietorship and etc. The decision should be based on advantages and disadvantages of different methods and refer to host countries'environmental factors and retail enterprises'own strengths. Retail enterprises should make the choices based on comprehensive assessment including current situation, ENDX, host countries' development status etc.There are three elements in retail expertise which are retail skill, culture and patterns. It can be divided as fixed part and practical part. The fixed part should have standardized multinational transfer and the practical part should have localization. Retail enterprises should have more learning and accumulate more internationalization experience, pay highly attention on the localization of retail expertise, keep host countries'core expertise and strengthen the information feedback and expertise innovation etc.The fifth part is about the optimization of indemnificatory policy. This paper indicates that government should show the duplicity function on policy formulation by analyzing retail internationalization policy system. It also provides the framework of retail internationalization indemnificatory system and supports with policy suggestion in the aspects of supervision, legal protection and service support.The sixth part is the case study. This part takes Walmart and Ahold oversea markets divestment cases as examples. It further investigates the reason behind the failure of retail internationalization from four aspects:market selection, entry method, retail localization and adaptation and uncontrollable factors. This part not only sets up the theoretical framework for the failure of retail internationalization but also sets up the theoretical framework for retail international operation and policy, which provides theoretical explanation for Chinese retail enterprises'international operation strategies. The experiences of failed cases could help to make scientific decision for retail enterprises at the beginning of international operation. It will not only help to build up the oversea company's superior competitiveness but also enhance the company's international equity. This part also takes Suning and Tiankelong as internationalization samples to conduct a comparative analysis on the international operation strategies. The case of Suning purchasing LAOX proved that the internationalization option of Suning electronics is relatively developed economy entity in short distance and similar culture background. Suning also adopted the entry method of purchasing local similar companies. The motives are to learn more advanced retail expertise from them. The failed experience from Tiankelong Moscow store include:lack of environmental knowledge of host country, high-risk entry method, no clear goal of oversea investment, unsuccessful core retail culture transfer, no proper localized retail expertise.The last part comes out with the investigation results, investigation limitation and expectation for the future.