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Carrefour boosts expansion to ride on Chengdu's urbanization
June 6, 2013, Thursday
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AS part of China's efforts to propel urbanization and reduce reliance on export-driven growth, increased domestic consumption is a key tenet of the central government's current Five-Year Plan.
French retailer Carrefour's presence in Chengdu dates back 14 years, when the first store was opened in September 1999.
The Chengdu area has become Carrefour's third-largest market in China in terms of number of stores and sales volume, just behind Beijing and Shanghai.
As the earliest multinational retailer to expand into western China, Carrefour had 13 outlets in Chengdu as of this January, each covering more than 8,000 square meters.
Carrefour recognizes the huge potential of China's second- and third-tier cities and has great confidence in the urbanization process.
In January this year, the company opened the first provincial store in Anhui Province at a site in Mengcheng County. In March, it also opened a store in Hohhot in Inner Mongolia Autonomous Region. These are examples of the company's penetration into lower-tier cities.
The company is expected to increase investment in these regions and introduce more localized products to meet market demand.
"We have full confidence in China's market and we want to reinforce our investment and expansion in China," said Thierry Garnier, president and CEO of Carrefour China.
"Despite the difficult environment, Carrefour will keep its strong expansion pace. We are committed to be a good Chinese citizen company."
Together with Brazil and Europe, China is among the three key global markets for Carrefour.
Chengdu is a key area of Carrefour's expansion in western China. It has added an average of two to three new stores in the city since 2008.
The company's development in this area complements the city's urbanization strategy. It initially focused on the downtown area and is gradually expanding out with the city.
Chengdu is also the western regional headquarters for Carrefour China, overseeing the company's operations and procurement businesses in a vast area that spans the regions of Sichuan, Chongqing, Xinjiang, Guizhou.
In response to the changing retail industry environment in China, Carrefour split its central and western regional headquarters in March this year. It opened a new central regional headquarters in the city of Wuhan in Hubei Province. Chengdu will remain the western regional headquarters.
Localized management
Carrefour now operates 220 stores in 68 domestic cities.
The concept of the localized management team is also a vital part of the French retailer's business in China.
Since 2000, the company has set up Carrefour China Institute to offer professional training for employees. It has also forged strategic partnerships with local colleges to attract industry talent. About 99 percent of its store managers are Chinese.
Carrefour will stick to its low price strategy, open new locations and expand sourcing venues to maintain its price advantage.
The company is also committed to cutting operational costs through energy saving green technologies and environment protection methods.
Since 2007, the French retailer has been stepping up efforts to connect with local agricultural suppliers, setting up 17 Carrefour City Units. As of today, it has established partnerships with 534 rural cooperatives in 32 provinces.
In Chengdu alone, these partnerships cover 35 rural cooperative, with annual procurement value of 52 million yuan(US$8.39 million).
Purchasing from local rural cooperatives can ensure food safety and freshness, and reduce procurement cost that the company can pass on to shoppers with cheaper prices.
By the end of 2012, this kind of collaboration has allowed Carrefour to procure fresh agricultural products valued at over 1.44 billion yuan.
After more than five years' development, over 30 percent of Carrefour's fresh fruits, meats and vegetables are sourced in China. In Beijing and Shanghai, that proportion is over 50 percent.
French retailer Carrefour's presence in Chengdu dates back 14 years, when the first store was opened in September 1999.
The Chengdu area has become Carrefour's third-largest market in China in terms of number of stores and sales volume, just behind Beijing and Shanghai.
As the earliest multinational retailer to expand into western China, Carrefour had 13 outlets in Chengdu as of this January, each covering more than 8,000 square meters.
Carrefour recognizes the huge potential of China's second- and third-tier cities and has great confidence in the urbanization process.
In January this year, the company opened the first provincial store in Anhui Province at a site in Mengcheng County. In March, it also opened a store in Hohhot in Inner Mongolia Autonomous Region. These are examples of the company's penetration into lower-tier cities.
The company is expected to increase investment in these regions and introduce more localized products to meet market demand.
"We have full confidence in China's market and we want to reinforce our investment and expansion in China," said Thierry Garnier, president and CEO of Carrefour China.
"Despite the difficult environment, Carrefour will keep its strong expansion pace. We are committed to be a good Chinese citizen company."
Together with Brazil and Europe, China is among the three key global markets for Carrefour.
Chengdu is a key area of Carrefour's expansion in western China. It has added an average of two to three new stores in the city since 2008.
The company's development in this area complements the city's urbanization strategy. It initially focused on the downtown area and is gradually expanding out with the city.
Chengdu is also the western regional headquarters for Carrefour China, overseeing the company's operations and procurement businesses in a vast area that spans the regions of Sichuan, Chongqing, Xinjiang, Guizhou.
In response to the changing retail industry environment in China, Carrefour split its central and western regional headquarters in March this year. It opened a new central regional headquarters in the city of Wuhan in Hubei Province. Chengdu will remain the western regional headquarters.
Localized management
Carrefour now operates 220 stores in 68 domestic cities.
The concept of the localized management team is also a vital part of the French retailer's business in China.
Since 2000, the company has set up Carrefour China Institute to offer professional training for employees. It has also forged strategic partnerships with local colleges to attract industry talent. About 99 percent of its store managers are Chinese.
Carrefour will stick to its low price strategy, open new locations and expand sourcing venues to maintain its price advantage.
The company is also committed to cutting operational costs through energy saving green technologies and environment protection methods.
Since 2007, the French retailer has been stepping up efforts to connect with local agricultural suppliers, setting up 17 Carrefour City Units. As of today, it has established partnerships with 534 rural cooperatives in 32 provinces.
In Chengdu alone, these partnerships cover 35 rural cooperative, with annual procurement value of 52 million yuan(US$8.39 million).
Purchasing from local rural cooperatives can ensure food safety and freshness, and reduce procurement cost that the company can pass on to shoppers with cheaper prices.
By the end of 2012, this kind of collaboration has allowed Carrefour to procure fresh agricultural products valued at over 1.44 billion yuan.
After more than five years' development, over 30 percent of Carrefour's fresh fruits, meats and vegetables are sourced in China. In Beijing and Shanghai, that proportion is over 50 percent.
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