Tesco’s failure in China market
I. Introduction:
Tesco-is-a-British-multinational-grocery-and-general-merchandising-supermarket-chain-with
its-headquarter-in-Cheshunt,UK.In-July-2004,Tesco-entered-China-with-the-140 purchase of-a-
50-per-centstake-in-Chinese-hypermarket-chain-Hymall. However, since its launch in 2004,
Tesco has struggled to make money in China, as it faced competition and struggled to expand.
Therefore, Tesco sold 80% of its stake to China Resources Holdings (CRH), in which Tesco’s
131 stores-would-be merged with CRE’s 3000 stores under the brand Vanguard (Lawson, A
2014). In 2020, Tesco completes China exit by the $357 sale of its remained 20% joint venture
stake to CRH. This paper will take Walmart and Carrefour- successful transnationals firm while
operating in China to define and analyze the issue of Tesco, shed light on the reasons why Tesco
was forced to withdraw from China regarding timing of entry, cultural factors and international
human resource management. Moreover, relevant solutions will be come up with.
II. Analysis
1. Timing of entry:
Tesco entered China in 2004, which was very late compared Wal-Mart entry from 1995 to
1997, which was on the second phase-among four major phases of government policies’
alternation-affecting-foreign retailers’ expansion process. Therefore, Wal-Mart was the first-
mover. According to Kerin, Varadarajan and Peterson (1992), the first mover will achieve a
spatial preemption advantage-by selecting the most attractive geographic space, perceptual
space, distribution-space-and-market-segments. A first mover can be in a position to restrict the
amount of space available and reduce the spatial options available to later entrants. Walmart
achieved several benefits, comprising shop venue’s choice, relatively low land costs, premium
retail positioning in major cities (Wang, Q 2013). Therefore, as a latecomer, Tesco failed to
obtain space in prime locations and had a minimal base of marketing intermediaries, specifically
dedicated suppliers (Kris, 2020). In short, latecomer like Tesco was unable to use ‘first-mover
advantages’ to-select-the-location-of a-better-and-cheaper-price-store.
2. Culture factors:

BUSM 3311 – International Business Assignment

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