[Name of Writer]
[Name of Professor]
The Knowledge Economy
Current Economic scenario in Retail Internationalisation Strategies
While the volume of academic research on retail internationalisation has increased dramatically, understanding of the economics of retail internationalisation is still far from complete or comprehensive. Existing theories and analytical frameworks fail to capture or fully explain retail internationalisation as it is now happening (Dawson, 255).
The search for a deeper understanding of the process of retail internationalisation is becoming more important as global retail concentration appears to be intensifying. The 1990s was an important decade for the development of international retailing. During this period there was a marked shift towards foreign direct investment and away from less intensive forms of internationalisation such as franchising (Myers, 25). In particular, there was a significant intensification of retail concentration in Europe driven by the merger and acquisition activities of powerful retailers, such as Carrefour, Ahold, Metro, Tesco and Wal-Mart. The opening up of the hitherto closed economies of Central and Eastern Europe and the People's Republic of China has helped to catalyse international competition between the major retailers.
This paper focuses on the knowledge economy of global competition for retail customers in the fast moving consumer goods (FMCG) sector in the People's Republic of China. It does not cover Hong Kong SAR or Macao SAR. The analysis is centred on two issues: the most important factors of the Chinese market to international FMCG retailers and the long-term strategic objectives of public policy behind international expansion in China. The first section of the paper presents a brief review of the literature on the factors and motivation behind retail internationalisation and an overview of the retail sector in China. Finally an evaluation is provided of the likely effect of recent public policy changes and China's accession to World Trade Organisation (WTO) membership on the retail sector.
China cannot easily be treated as a single homogeneous market. Firstly, existing disparities of income between the coastal cities and those located in central and western China and between large cities and towns suggest that market potential varies widely between locations. Secondly, the exposure of the population in the south to foreign mass media, especially from Hong Kong, leads to differential buying behaviour between the south and the north (Yip, 253). To carry out the fieldwork for this research, four cities were chosen: Beijing and Shanghai were chosen as wealthy `northern' cities and Guangzhou and Shenzhen as wealthy southern cities well within range of Hong Kong's mass media. All four cities are among those with the highest average urban per capita disposable income in China and have also been exposed to...