Walmart In China
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Walmart is the world’s largest retailer store that provides customers with thousands of types of fresh foods, clothes, household appliance s, grocery and offers a one stop experience for customers. Walmart began as a single small discount store with the simp le idea of selling more for less and over the years it has h as grown to be one of the largest retailer in the world. Over the years, Walmart has endeavored to create more sustainable opportunities and to bring value to customers and communities around the world. Walmart history is traced back to 1962 where Sam Walton opened the first Walmart store in Rogers, Arkansas and ever since it has focused on helping customers and communities save money and live better (Spicer, (Spicer, 2012) 2012) Nevertheless, Walmart has experienced bountiful problems especially in entering the the Chinese market. For over 18 years of operation in China, Walmart has only man aged to open just four hundred and five stores. Walmart operates in 11 7 cities and 25 provinces in China. Although Walmart has experienced admirable growth and success in other countries like Mexico and Brazil, it has failed to make significant growth in the world’s second largest economy. Studies have indicated that Walmart has failed to gain significant momentum in China majorly because it has failed to meet the tastes and preferences of Chinese consumers (Dunne, (Dunne, 2013). 2013). In China, it has been noted for years that consumers’ buying decision is influenced or rather inclined towards tailor-made products as well as shopping environments that that reflect the country’s customs, tastes and preferences. Walmart entered the Chinese market in 1996 in a bid to take advantage and overtake the existing retailers who had already incorporated the conc epts and strategies that Walmart was using. Sam Walmart’s Walmart’s dream was to invest and enter the market of the second largest economy econom y in the world. However, Walmart’s inability to reverberate with the local ma rket and meet the consumers tastes and preferences has derailed its efforts to advance its infiltration i n the Chinese market. In the business world, failure to meet the tastes, choices and preferences of consumers possess bountiful challenges to the business (Donaldson, (Donaldson, 2013). 2013). The retail shops that are flourishing in the Chinese economy are those that have taken taken time to understand the consumers’ behavior. Surprisingly, research indicated that Walmart China contributes only 2% to overall Walmart’s revenues. Walmart’s most engraving challenge is that as much as it has incorporated its strategy of everyday low prices (EDLP) which has proven to be successful in other countries, it has failed meet the Chinese consumers’ tastes and preferences that is driven b y authenticity, legitimacy and quality of products. Walmart’s native competitor, Sun-Art Sun-Art retailer has been noted to perform better in the Chinese market majorly because it has endeavored to understand the consumers’ tastes, wants and preferences. Failure to provide the Chinese street look and Chinese super market product displays has proven to be unattractive to the Chinese consumers. Sun-Art Sun -Art has adopted local Chinese strategies in its stores therefore attracting more consumers. Incorporating Chinese localized strategies in Walmart would overwhelmingly attract more customers and boost the growth of the company (ZHAO, (ZHAO, 2007). 2007). China has been on the forefront in advising local and international investors in their country to pay attention and focus on workers, consumers, communities, environment as well as other stakeholders to enhance the growth of their operations. Walmart should ensure that it
Walmart In China
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abides by the market orientation of the Chinese market instead of its United States standards of operation. It has been noted that some strategies being used by Walmart are scaring awa y local suppliers and this makes it even harder for Walmart to thrive in the Chinese market (Chan, 2011). The information systems being used in China are way too behind the United States standards and this is making it difficult to achieve the levels of Walmart’s request because of lack of appropriate information processing capabilities. The culture of Walmart that is copied from the United States does not fit in China and this creates a conflict with the Chinese society, culture and practices. Walmart China should ensure that it business operations are in line with the Chinese society, culture and practices. Walmart uses the United States suburb sitting strategy that does not match the consumers’ spending habits. Walmart should drop its suburb sitting strategy and adopt the Chinese consumers’ habits (Cao, 2013). Unlike in the United States where people prepare list of goods to buy from retail stores, Chinese consumers prefer or rather regard shopping as a leisure activity or a way of passing time and therefore they do not have any direct list of products to buy in retail stores. In the United States, most people live in the suburbs and they are forced to drive to retail stores to buy products whereas in China, retail stores are near people’s residences and this makes it easier and convenient for Chinese consumers to buy products from retail stores when they go out of the house for a walk (Chan, 2011). Walmart should incorporate this strategy in China to ensure that convenience to Chinese consumers. Chinese prefer large-scale promotional activities and they are often more than willing to do price comparisons. Walmart should adopt this strategy to boost their sales as well enhance their growth. Although China has been indicated to have the second largest economy in the world, recent studies have indicated that the economy has been noted to slow down as from 2012. The Gross Domestic Product growth rate has fallen from the historical average o f 9.3% to an average of 7.7%. Per reports from the World Bank, it is estimated that the economy might drop even further. Walmart and other businesses have been directly affected by the sudden drop in the GDP growth rate (Kamboj, 2011). The sales as well as the growth of Walmart is being affected by the economic problems being witnessed in China. However, the government of China has promised that it will ensure that the economy rises even higher over the next few years. Consequently, this will boost the performance of Walmart retailers ( Ngai, 2012). China’s population which is estimated to be more tha n 1.3 billion provides fertile grounds for businesses to thrive. The initial target of Walmart was to reap advanta ges from the vast market share of consumers but a few challenges have derailed the growth of the Walmart. The economic structures like institutions and infrastructures have been indicated to lag behind as compared to the West. China’s infrastructures cannot accommodate Walmart’s strengths and this presents the company with so many challenges (Chuang, 2011). The lack of sophisticated technology and dwindling physical infrastructure possess serious threats and derails the substantial growth of Walmart. The culture of Chinese consumers is different from that in the West and this makes it almost impossible for Western companies to appeal to the Chinese consumer tastes and preferences. Consequently, this troubles the growth o f Walmart because it incorporates Western strategies that are contrary to the Chinese culture.
Walmart In China
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Walmart and other companies have indicated that it is hard and demanding to circumnavigate through China’s complex web of both local organizations and national political organizations. There strict policies and regulations that in China that hinders easy operation of foreign investors. As much as the country is big and its economy large, navigating through as a business is always hard. In most cases, both local and national political organizations favor the local businesses and companies while at the same time harassing and enacting strict measures and policies against foreign investors and businesses. Consequently, businesses owned b y Chinese citizens thrive more and faster than the foreign businesses (Pringle, 2013). Walmart is no exception, some measures and policies in the Chinese business market have contributed to its slow and sluggish growth. At a certain point, Walmart was heavily fined by the Chinese government with claims that it had violated both local and national laws. The government went a step further and even ordered for temporary closure of Walmart stores. Walmart paid the fines and claimed that the accusations were unfounded and illegitimate. In order for Walmart to make better growth and e xpansion decisions, it should take both time and a more sophisticated understanding of e conomic, political and cultural environments of the countries and regions in which they intend to operate. Subsequently, they should appreciate the differences and align their strategies and mode ls to fit in the different economic, political and cultural environments. Walmart should ensure that it gets its employees from the local communities near the retail stores (Xiaomin, 2007). This can aid in ensuring that the employees incorporate familiar measures as well as strategies that can aid in making the company attract more customers. Walmart uses a self-managed team strategy that allows its employees to make certain vital decisions because the employees shou lders and carries the greatest mission of Walmart of caring about customers. It has implemented a pro fit-sharing plan with its employees, employee discounts, scholarships and incentives (Mun, 2012). This boosted the growth of Walmart in a great way. Walmart should therefore consider fostering and strengthening this particular strategy in order to aid in substantial growth and expansion (Chan, 2008). Walmart must adapt to the changing attitudes of the Chinese workers. A 2004 study highlighted that Chinese workers had lower engagement and morale than prior. Team members must be challenged and invested in. Workers need to be developed to ensure an adequate pipeline of leaders (Burkholder, 2006). Recent studies have indicated that Walmart is changing Ch ina and has made significant progress. Walmart has continued to bring healthier and more affordable food and other products to China therefore allowing customers to save more an d live better. Walmart has endeavored to make the company a workplace of opportunities and in this regard, it has created thousands of job opportunities for people in China (LeBaron, 2014). Walmart has contributed to growth of the Chinese economy by making other retailers and suppliers in the country to offer cheap and quality products to the Chinese community. Walmart’s spirit of hard work, enterprise, fair dealing and integrity has infiltrated the Chinese business market therefore fostering better business practices for local and foreign investors in China (Brea‐Solís, 2015).
Walmart In China
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