Walmart In China Case Study

Business Theory

Student’s Name

Institutional Affiliation

Walmart in China

Characteristics of China as a Global Market

Wal-Mart has continued to open up stores globally amidst stiff competition from Amazon. The retail stores can attribute its success to the low costs of goods and the ability to venture into different countries like China. China is appropriate for business because the cost of labour is cheap which translates to fewer expenses for the firm (Gupta, Govindarajan, Wang& Govindarajan, 2008). China is also ripe with local resources which also come at a lower price thus enabling the company to generate their income. Wal-Mart recognises the fact that it must team up with the local people to have a successful business

Moreover, the retail business has been unable to apply the same tactics that are implemented in America. Wal-Mart is famous for the fact that it offers low-cost goods to customers who purchase the goods from the stores in bulk. However, the Chinese clientele understands the need to get value for their money thus requires more from Wal-Mart than simply low prices. Moreover, the China market is hostile to the western companies (Huang & Yu, 2015). Usually, the local businesses see the international industries as a threat, and this may pose a challenge even to the customers. There could also be a perception of the foreign countries bringing rejected good within the country to profit from the mass market. At some point, Wal-Mart was forced to shut down its stores in China for violating its local laws and later made to pay the fines. The cost of borrowing is also fast increasing in China as the government has continued to increase the minimum reserve requirement. Consequently, Wal-Mart may fail to get extra funding while in need which may end up affecting their expansion prospects. The rate of inflation keeps on increasing meaning that the value of the local currency may reduce thus making Wal-Mart products expensive and this may reduce

Furthermore, Basker (2007) contends that the rise of the e-channels means that the cost of goods may end up being cheaper than the competitors and also accessible to the clients. Wal-Mart allows its customers to shop online at their convenience and sometimes the customers can be directed to the stores around them. Wal-Mart will also seek to study its market well to ensure that it understands their needs thus matching it with their supplies (HUANG & Yu, 2015). Chinese customers have different needs across the different cities; there is, therefore, need to understand the market demand to ensure that the company offers and delivers beyond their expectation (Cheung, 2011). The managers also need to tailor make their steps to China and acknowledge the fact that the policies implemented in America may not always work with