Carrefour progress slowed in China

Eurofood, August 2, 2001

One of the most successful foreign retailers in China, namely French supermarket giant Carrefour, may escape severe reprimands having flouted expansion rules in China.

Carrefour had expanded aggressively since arriving in China, and reached agreements with local regional authorities to build stores. However, the French giant ignored the State Economic and Trade Commission (SETC) when it came to applying for permission to erect stores.

At the time, the French concern feared it may face severe punishment from the strict Chinese authorities, perhaps with several stores ordered to close. However, it appears the Chinese authorities have had a change of heart, as it looks to soften its image before entering the World Trade Organisation (WTO) sometime this year. It appears that the French retailer may only be slowed in its progress to expand, while its rival, US and world giants Wal-Mart, may be allowed to push ahead with its expansion plans.

SLOWED PROGRESS COULD BENEFIT RIVALS

Although not as severe as enforced enclosures, the slowing down of Carrefour's progress could cost the French outfit in the long run. By avoiding gaining licenses from SETC, Carrefour built itself up rapidly in China, and became the country's second largest retailer within five years. Wal-Mart, already with 12 stores, and licenses obtained for new stores, could be about to dispute that fact.