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Case Title:

China's Home Improvement Market: Should Home Depot Enter or Will it Have a Late-mover (Dis)advantage?

Publication Year : 2006

Authors: Muthu Kumar, Nagendra V. Chowdary

Industry: Home Appliances and Personal Care Products

Region:China

Case Code: COM0120

Teaching Note: Available

Structured Assignment: Available

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Abstract:
Since the mid-1990s, the home improvement market in China is growing rapidly. Besides housing reforms, rise in peoples' incomes, purchasing power and property investment encouraged private home ownership in China. Homeownership in China, which was non-existent two decades ago, has increased to 70% today. New homeowners have to fit up the basics like flooring, plumbing and furniture, as the houses are unfinished ones. This has encouraged consumers to engage in do-it-yourself (DIY) and home improvement/decorating activities. Coupled with this huge potential growth and market liberalization, China's home improvement market attracted many domestic and foreign home improvement retailers like IKEA and B&Q. China, with a population of 1.3 billion and a rapidly growing economy, has become an attractive market for many foreign companies. Atlanta-based Home Depot, the world's largest home improvement retailer, is weighing its China options: should it enter or not. Some analysts are skeptical about its late-mover disadvantage? Or does this delay help in shortening its learning curve and rise rapidly.

Pedagogical Objectives:

  • To understand the evolution of China's economic growth
  • To debate on the inequalities between the geographical regions in China
  • To analyse and understand the housing reforms in China
  • To analyse China's home improvement market industry to understand the opportunities and challenges for home improvement retailers in China
  • To debate whether Home Depot should enter China or not
  • To discuss whether Home Depot's late entry would be an advantage or a disadvantage.

Keywords : oreign home improvement retailers in China; China's home improvement industry; Do-it-yourself (DIY) and buy-it-yourself (BIY); Late-mover disadvantage and first-mover advantage; Home Depot, B&Q and IKEA; China's housing reforms; China's economy; real estate; property market; Joint ventures / strategic alliances and partnerships; Market entry strategies; Industry Analysis Case Study; China's urban-rural divide; Orient Home; Homeway and Home Mart; Income disparity; GDP (gross domestic product) and purchasing power parity

Contents : 
China’s Economy and Real Estate
China: GDP Per Person by Province
Four Generations of China’s Economic Growth
China’s Home Improvement Market
China’s Home Improvement Market: Percentage Breakdown by Sector
China’s Home Improvement Market: Growth of DIY Products
Growth of Total Home Improvement Market of China
China Home Improvement Market: The Major Players

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