Carrefour's Exit from Japan

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Case Details:

Case Code : BSTR185
Case Length : 16 Pages
Period : 2000-2005
Organization : Carrefour
Pub Date : 2005
Teaching Note :Not Available
Countries : Japan
Industry : Retail

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Carrefour in Asia

Carrefour forayed into Asia in 1989 through a joint venture with the Presidential Enterprise Corporation of Taiwan. Gradually, Carrefour extended to Malaysia, China, Thailand, Hong-Kong, Korea, Singapore, Indonesia and Japan.

By 2004, the company opened 170 hypermarkets, 6 supermarkets, and 164 hard discount stores in Asia. Carrefour followed a few criteria to assess the market before entering into it. These were:
• Small-scale retail rationalization and reorganization has not progressed.
• Large-scale chain supermarkets are absent from the market.
• Potential competitors that carry specialty items like household electrical appliances and clothing are absent from the market.
• Large amounts of retail space can be attained at low cost.
• Laws and regulations governing large-scale retail operations are "developer friendly"...

Carrefour's Entry Into Japan

In June 2000, the Japanese government allowed foreign retailers to open up large stores by deregulating the Japanese Distribution sector and abolishing the Large Store Law. The Large Store Law was formulated in 1974.

It was administered by the National Government and posted restrictions on the number of stores with large floor space including department stores and general merchandise super stores. The law was in effect until April 2000. The Large-Scale Retail Store Law was enacted in 2000 following the abolishment of the Large Store Law. The new law gave the authority to limit large stores to prefectures and municipalities of the concerned region. The criteria used for approving or disapproving applications for opening of large stores (1000m2 or greater) was also relaxed to limit it to environmental concerns of noise and traffic. Also, a slump in real estate prices and an increasing availability of land made it easier for foreign retailers to enter the market...

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