Walmart has had a slow process of creating business in China, due to encountering a numerous amount of problems with the country. The company was stalled by Chinese business regulators which were made up of bureaucracies, which resulted into the company to move slowly. Whereas their high competitors were bending their rules and using it to their advantage and progressing at a faster pace than Walmart, which lead to their competitors to secure a place in the world’s largest consumer market. Walmart has had to adjust their business models so that it would fit the Chinese consumer culture, due to the faced problems with logistical difficulties and regulatory obstacles.
Personally I would rate the attractiveness of the retail environment in China as moderate right now, however I do believe that it could increase through time. Due to having a slow start in the business market in China, they have had many other competitors come in and establish their stores throughout the country, making it harder for Walmart to attract Chinese consumers. In the other hand I believe that following the rules in their host city and doing things the right way would soon turn to their favor.
Adjusting their strategies in China would soon make it clearer to citizens what Walmart is trying to do, where U.S. consumers have already been accustomed to, which is “everyday low prices”. Although the threat of new entrants is low, I believe it is low due to the entrance of other competitors in china, I firmly believe that Walmart will be able to dominate their market by giving areas more for less than the competing companies. Walmart has been successful using the Five Forces to their greater advantage when it comes to the store’s successes, therefore I believe that they will be able to adjust and have a bright future in China.
One of the major problems that Walmart was undergoing was adjusting and fitting into the Chinese consumer market. Walmart has had great successes in the United States by targeting their stores to be put into smaller communities, rather than the larger ones. This was executed because of the strategy of driving out competitors by making it intolerable to compete with Walmart’s “exceedingly low prices”.
The focus towards this strategy was to bring big brand names out of higher populated areas and into the smaller populated areas without bringing the associated costs. However in China, the strict government control of market access has prevented Walmart from building their super stores in smaller areas. Also Chinese consumers were more focused with the prices rather than brand loyalty, therefore the strategy of offering low prices for brand names were not very effective. Another issue was competition, as Walmart made its way into the market, several other competitors were attempting to do the same.
This resulted into making it harder to have Chinese consumers shop at their stores. Walmart followed the steps and rules in the Chinese business world, whereas the other competitors tried to make their way around it, which resulted into Walmart having a much slower start and giving the competitors a greater advantage in brand placement and market access.