Archive for March 2, 2009

The Sydney Morning Herald published this morning a Telegraph (London) article under the title “Global Retailers battle in China” – a piece on the competition between British Tesco, American Wal-Mart and French Carrefour in one of China’s minor cities, Shenyang. There’s quite a bit of business information on Tesco’s position in that marketplace; what I found specifically (and amusingly) interesting though were the cultural differences between Western and Chinese customers. Posted below is the extracted part from the main article that refers to the Chinese way of supermarket shopping:

tesco-china1Outside Tesco’s Tie Xi store in Shenyang – one of five that it has in the city – Ken Towle, the president and chief executive of Tesco’s Chinese operations, starts to explain some of the cultural differences between operating in Britain (population 60 million) and operating in China (population 1.3 billion but with lower consumer spending). Mr Towle is interrupted by a noisy minibus pulling up next to him. The vehicle has a large Tesco logo down its side. Dozens of shoppers step out and march quickly into the store. Cultural difference number one: there are only two cars per 100 people in China, meaning that retailers have to lay on transport.

Cultural difference number two is apparent as soon as we step into the store; the product mix. Foodstuffs range from coffee-flavoured tea, doughnuts covered in spicy shredded “pork floss”, live fish and tortoises in tanks, and pig faces, to huge volumes of products such as rice and seaweed. There is also a large non-food offer.

The store’s atmosphere and fragrance are more akin to a traditional wet market than a supermarket. Employees shout out about their products, “essentially hawking”, says Mr Towle. Customers jostle around piles of fruit that are on promotion, squeezing the products and disregarding any items deemed substandard. tesco-china2Any packaging is ripped off – customers believe it adds to the weight and do not like paying extra for it. The store, as in all supermarkets in China, is spread over two levels, starting on the first floor, mainly as space restrictions dictate that growth is upwards not outwards. The ground floor is occupied by third party retailers chosen by Tesco to complement its product offering.

Understanding the needs and motivations of Chinese consumers is the name of the game for Mr Towle, who has run Tesco China since 2005. A butcher chops up a pig carcass on a block. Mr Towle explains that shoppers in wet markets check whether meat is fresh by seeing how warm it is; if meat is warm, the pig has been recently slaughtered and is good.

Chinese consumers are among the most demanding and strong-minded in the world. “People’s instinct is to be suspicious of the quality,” says Mr Towle.

Shoppers are also politically aware, as French supermarket Carrefour discovered to its cost last year. The perceived pro-Tibet stance of the French establishment before the Beijing Olympics last year led to boycotts of Carrefour’s stores.

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