The Impact of CarrefourÕs Operation in Taiwan
Hitoshi Tsuchiya, Department of Marketing and Distribution Management National Kaohsiung First University of Science and Technology
Abstract
The internationalization of Carrefour, having more than 9,000 branches in the twenty-seven countries, is expanding rapidly after 1990s. Today, there are approximately 100 stores in Asia, including twenty-four stores in Taiwan, where is the earliest (1989) area expanding her business in Asia. The purpose of this study is to investigate how Carrefour, a multinational retailer, entered Taiwanese market, and how she changed Taiwanese traditional distribution system.
Today, Carrefour achieves a position as the biggest discounter both store numbers and sales in Taiwan. Her sales were over 40 billions NT.dollars in 2000, already over the sales of department stores, her great presence is gradually becoming strong in Taiwanese distribution systems. Because of the governmental regulation, she has a local partner. Her partner is PRESIDENT ENTERPRISES, which is the leading company in Taiwan of consumer food products, animal foods and other foodstuffs. Meanwhile, PRESIDENT is also the parent company of 7-Eleven Taiwan and the other many retailers. After deregulation concerning foreign direct investment on service industries such as retail business in 1996, Carrefour opened first store in Kaohsiung, where is the second largest city in Taiwan, in 1989.
Carrefour seems to be enjoying its success in Taiwanese market because of following three reasons. First, its local partner is the largest food company in Taiwan. It has the ability of performing the stable mass purchase for this strong supplier. Second, Taiwanese distribution system is suited for CarrfourÕs merchandising way. It was not hard to enter Taiwanese market because of its commercial custom as direct deal between producers and retailers. From this viewpoint, it is different situation from its entering Japanese market. Third, there were no powerful local competitors. Before the deregulation in 1986, department stores were the only large-scale retailers in Taiwan. Even though there were some chain-store super markets, but their scales were very small. The main rivals for Carrefour in Taiwan were other foreign discounters like Macro, Holland-based company, which also opened first store at same year as. Facing the competition, Carrefour has been increasing their new stores aggressively and rapidly by making good use of the power of their local partner.
In the existence of Carrefour becoming more and more strong in Taiwan, how she influenced Taiwanese traditional distribution systems? Regarding the numbers of whole retail business, we can not look the typical pattern as decreasing under the growth of large-scale store yet. In the meantime, there is an obvious change in the business relationship after the appearance of Carrefour in retail business. Originally most of the business was done by small and medium-sized producers and retailers; there is no existence of large-scale ratailers as discounters. In fact, CarrefourÕs sales scale and network have great attraction to small and medium-sized producers, but the other hand, the initiative the business negotiation is always in the palm of Carrefour due to their strong buying-power. At the same time some foreign commercial customs (e.g. the rebate system) were also brought by them. Generally, this kind of commercial customs have been produced by local enterprises in the development of distribution industry, this case suggests the possibility that the entrance of foreign large-scale retailers facilitate the entry of new commercial ways and change local distribution systems.
