Analysis of Suning.com's Global Market Entry Strategy: UK Retail

This report examines the internationalization efforts of Suning.com, a major Chinese retailer, focusing on its potential expansion into the UK retail market. The report begins with an introduction to the concept of internationalization and its importance for business growth. The main body of the repor...Read More

Global Enterprise

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Location for Global Market Entry...............................................................................................3
Global Market Entry Methods.....................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Internationalisation of a business organisation by entering into global markets is an
effective way for business organisations to grow and expand their operations and increase their
overall market share, customer base, productivity and profitability in the consumer markets
(Cabrera, 2018). This report evaluates the internationalisation efforts of Suning.com Co., Ltd,
which is amongst the largest retailers of China specialising in selling various types of home
appliances, general merchandise, cosmetics, books and household commodities to the consumer
in the retail markets of China. Suning.com was founded in 1990, and currently operates more
than 1600 retail establishments in 700 different cities of mainland China and Hong Kong.
MAIN BODY
Location for Global Market Entry
Suning.com can internationalise their business operations and enter into new global
markets with the intention to grow and expand their business and increase their market share,
customer base, productivity and profitability in the consumer markets. For this the first step that
the leadership and management of Suning.com needs to perform is choosing the location of
global markets to enter. As Suning.com’s entire operations are based in China, they have the
option to enter the markets of various countries of the world. One of the most profitable retail
markets that are available to Suning.com to expand into are the retail markets of UK. There are
numerous reasons as to why expanding into the retail markets of UK would prove to be highly
productive and profitable for Suning.com and effectively result in an increase in their existing
market share and customer base. These are as follows:
 Ease of Business: UK is statistically one of the easiest places in the world to set up and
run business operations, as can be evidenced by the World Bank report, which evaluated
that it only takes 13 days for a business organisation to begin their operations in the UK
as opposed to the average duration of 32 days for the rest of Europe (Wright, 2017). The
World Bank has ranked UK as Sixth best location for the ease with which business
organisations such as Suning.com can begin to operate in the UK markets. Starting their

business operations in UK would be significantly easier for Suning.com than other global
markets.
 Taxing Environment: Businesses operating in the UK also enjoy comparatively low
taxing environment, with the UK government also recently announcing a reduction in
corporate tax from 19% to 18%, which is levied on a business’s profits, from April 2020
onwards. This presents immense opportunity for Suning.com to increase their
profitability, as the current corporate tax rates in China stand at 25% of the business’s
overall profits and entering UK’s retail markets will surely result in significantly
increased profitability for Suning.com, even if they service less number of customers in
the UK’s retail markets.
 Skilled Labour and Employees: Starting their operations in the UK markets will also
provide the management of Suning.com access to recruit and hire even more skilled
employees than is available to them in China, and increasing the overall skills of their
workforce will directly result in increased productivity, performance, efficiency and
profitability for Suning.com’s operations both in UK and in China as well (Gumparthi
and Deb, 2019). In addition, the UK also has a significantly large labour force, with UK
being the only European county that is expected to observe an increase in the labour
supply in the next 15 years, further providing opportunity for Suning.com to operate in
the retail markets of UK.
 Innovation: The UK is second only behind the USA and is amongst the world leaders in
regards to creation and innovation of new technologies and systems, which can
immensely help businesses increase their performance and efficiency (Kim, Lee and
Kwon, 2017). Starting their operations in the UK’s markets would allow for Suning.com
early access to these innovative systems and technologies which if their management
judges to be applicable and effective, have the potential to revolutionise the retail
operations of Suning.com and significantly enhance their operational performance and
efficiency to provide Suning.com with increased productivity and profitability in the
retail markets and provide them with a competitive advantage against their industry
rivals.

 Booming Economy: The economy of UK is one of the most stable economies of the
world and UK also boasts the highest Gross Domestic Product in its economy amongst all
European countries, with its GDP amounting to 2.21 trillion British Pounds as of 2019.
Global Market Entry Methods
To enter into the retail markets of UK, Suning.com has access to various market entry
methods, each of which have their respective advantages and disadvantages attached to them.
The different market entry options available to Suning.com to enter into UK’s retail markets are:
 Exports: Exporting into an international market the goods and products that are
manufactured locally is one of the easiest and efficient methods of entering into new
global markets for a business organisation. Suning.com can export the goods and
products it manufactures in China to the UK’s retail markets to increase their productivity
and profitability (Zou and Yu, 2020). Exporting involves considerably less risks and is a
very fast method of market entry into global markets. Though it does provide businesses
with less control over their expansion operations and requires the business to associate
with third party distributors who can sell in foreign markets.
 Merger and Acquisitions: Mergers and acquisition are market entry methods through
which a business can consolidate the operations of other competitive businesses into their
own with the intention to absorb the consolidated business’s productivity, profitability,
market share and customer base into their own. Merger is the friendly process through
which two businesses voluntarily consolidate their operations into a new business entity,
while acquisition is the aggressive process through which a business buys and takes over
the operations of other businesses (Masiero, Ogasavara and Risso, 2017). Mergers and
acquisition are both fast methods of market entry and can significantly increase the
productivity, profitability, customer base and market share of a business, but also carry
with them immense risks as businesses usually find it difficult to merge and work
together cohesively as distinct businesses have varying organisational culture, operational
methods, employee skills and structure.
 Joint Venture: Joint venture is the market entry option through which a business
collaborates with another business that operates in the local markets of the location it
wants to expand into. In this market entry method, both businesses come together to form

a separate business venture by agreeing to pool together their resources and conduct
operations in the market. This is a slow market entry method as it takes businesses time
to come together and negotiate a productive agreement, but also carries considerably less
risks, as the responsibility for loss, profits and costs are equally shared amongst both
businesses (Nilsson and Sala, 2018). This method is also an effective way for businesses
to enter into foreign markets as it doesn’t require market knowledge of the expanding
markets.
The method that Suning.com can make use of enter into global retail markets of UK is
joint ventures as this market entry method does not require extensive knowledge of UK’s retail
markets by Suning.com, as their partner would already possess the market knowledge needed to
successfully operate in UK’s retail markets. This method of market entry would provide
Suning.com with considerably less risks involved and also would not result in excessive
investments by Suning.com for their expansion to UK’s markets as all investments would be
shared by both Suning.com and their strategic partner in the joint venture. Though this would
also mean that Suning.com makes half the profits as all profits also would have to be shared, if
Suning.com is able to identify a strategic partner who would be able to cohesively work with
them, then the decreased profitability should not be a problem and would effectively result in
successful market entry of Suning.com into the retail markers of UK.
CONCLUSION
Based on the findings of the report, it can be concluded that internationalisation of a
business organisation by entering into global markets is an effective way to grow and expand
their current operations and increase their existing market share, customer base, productivity and
profitability in the consumer markets. This report evaluates the internationalisation efforts of
Suning.com as in their operations to expand into the retail markets of UK because of the
numerous advantages the UK markets provide to the operations and functions of Suning.com.
The UK markets are amongst the best expansion locations for Suning.com as they are immense
easy to start operations for a business organisation, have considerable lenient taxing environment
as compared to the other locations which Suning.com can expand to, possess significantly skilled
workforce and employees for Suning.com to recruit into their operations and have a stable

economy with the highest GDP amongst all European countries. Suning.com can make use of a
variety of market entry options such as exports, merger and acquisition and joint ventures, but
the most effective way for Suning.com to enter into the retail markets of UK would be through
joint venture method as they do not possess the necessary market knowledge of the UK’s retail
markets and this method doesn’t require market knowledge and also presents Suning.com with
considerably less risks to expand into UK’s retail markets.

REFERENCES
Books and Journals
Cabrera, G.A., 2018. The Global Expansion of Televisa. In Business Despite Borders (pp. 49-
63). Palgrave Macmillan, Cham.
Gumparthi, V.P. and Deb, M., 2019. Branding Dilemma and Global Expansion: The Case of
Caliber Technologies. South Asian Journal of Management. 26(3). pp.162-183.
Kim, H., Lee, J. and Kwon, K.H., 2017. Kolon FnC’s Global Expansion Strategy. Asian Case
Research Journal. 21(02). pp.253-280.
Masiero, G., Ogasavara, M.H. and Risso, M.L., 2017. Going global in groups: a relevant market
entry strategy?. Review of International Business and Strategy.
Nilsson, A. and Sala, M., 2018. Formation of market entry strategy with an interest in decision-
making: A case study in a B2B context.
Wright, A., 2017. Ease of Doing Business.
Zou, L. and Yu, C., 2020. The evolving market entry strategy: a comparative study of Southwest
and jetblue. Transportation Research Part A: Policy and Practice. 132. pp.682-695.