CHINA July 2019
 
Carrefour to withdraw from China
 
Carrefour Group has recently announced the signing of an agreement to sell its 80% equity interest in Carrefour China to Chinese-owned Suning.com for Euro 620 million (US$690 million). This is part of Carrefour’s plan to withdraw from the Chinese market in which it has been continually registering losses.
The transaction values Carrefour business in China at Euro 774 million (US$862 million). Carrefour will however retain 20% stake in the business. The transaction is expected to be completed by the end of the year. Carrefour China, which operates 210 hypermarkets and 24 convenience stores, had seen a sharp decline in sales with its 2018 revenue plunging 10%.
This makes Carrefour the latest in the list of foreign retailers like Tesco, Lotte Mart etc. which had either retreated or disposed their Chinese operations to local companies, amidst the fast changing and highly competitive Chinese grocery retail market. There is definitely a need for foreign companies to rethink their strategy in China. Chinese consumers are increasingly turning to online shopping rather than brick-and-mortar stores for their daily needs.
Suning.com, Tencent and e-commerce giant Alibaba have dominated the country's online retail market and the 3 have also been diversifying to brick-and-mortar stores lately. For Suning.com, the acquisition of Carrefour China business will enable it to diversify beyond consumer electronics and appliances as consumers demand all-in-one e-commerce platforms. China has by far the largest online food-delivery market, with 45% of global market share.
Nielsen study found that 19% of FMCG products like packaged foods, beverages, toiletries, OTC medicines and other consumables have recently been purchased online in China. In Germany, this is just 1.7%. To survive in China, foreign retailers need to ally themselves with at least one of the Chinese e-commerce platforms.
 
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