ABSTRACT
Within the globalizing economy, China is the new frontier for much of international business, and the country offers itself as both a major source of cheap labour and as a market of mass consumption. Foreign retailers began to enter China 16 years ago in 1992. Since then, many of them have established a firm presence in the largest emerging market in the world. Nonetheless, the Chinese market has not been easy to penetrate, and from the beginning, foreign retailers encountered a variety of difficulties. Indeed, when China first opened its consumer market to foreign retailers, there were high threshold barriers to the inflow of foreign retail capital. Accordingly, the persistent foreign retailers were seen taking unconventional as well as conventional paths to penetrate the Chinese market. The earlier patterns of entry and expansion of foreign retailers were documented in a 2003 study by Wang (2003). In that paper, the author highlighted the various government restrictions and explained how the foreign retailers bypassed regulatory barriers to enter the highly protected Chinese market. It was also predicted that the winners would be European and American retailers, who possess the most resources and advanced information technologies and do business in new retail formats, while cultural distance is a much less important factor for business success. Since then, significant changes have taken place in both the market conditions in China and its regulatory system including the elimination of trade barriers after China's admission to the WTO. This has afforded further opportunities for foreign retailers to enter and expand in the emerging market of 1.3 billion consumers.
