Economy

Carrefour Says Au Revoir To China: Lessons In Global Commerce

As Carrefour gets ready to sell a majority of its operations in China, lessons can be learned from the history of the French retail giant's choices over the years.

Carrefour will sell its operations in China
Carrefour will sell its operations in China
Editorial Board

-Editorial-

BEIJING — Carrefour, France's retailer giant, has announced that it will sell 80% of its Chinese operation, in a transaction worth 4.8 billion RMB (about $700 million), to Suning.com, one of China"s largest retailers. This is how a multinational retail giant puts a full stop to its adventure in China where it endeavored to succeed for more than 20 years.

Meanwhile, Suning — a purely local representative of Chinese retailers founded in 1990 — is going through a retail transformation as the deal is struck.

What we can't help asking, looking at Carrefour's decision, is what will it take for a foreign investor to win over Chinese consumers and be capable of sustaining success?

As a matter of fact, more and more foreign companies are finding the Chinese market very hard. Some struggle to survive, some quit. This is of course related to the Chinese economic downturn, but not only.

Carrefour introduced a brand new format of hypermarket into China as early as six years before China joined the World Trade Organization (WTO) in 2001. It started China's supermarket era.

Carrefour was once the beneficiary of China's opening process.

At one time, Carrefour was the inevitable rival of nearly all of its Chinese counterparts. It was also a well-respected mentor for them when, in 1995, Chinese supermarkets were yet to set off. Suning had only been founded five years earlier, and its sales were mainly air-conditioning equipments.

However, the subsequent growth of China's retailing sector has exceeded the imagination of all observers. This is particularly true since entering the internet and mobile e-commerce era. Combined with Chinese enterprises' innovative business models, the massive market scale, an ever-expanding middle class and fast-iterating and diversified consumption habits, the Chinese market went through a period of breaking up and restructuring at a gallop.

China's local retailing giants had not imagined this, but even operators like Carrefour were left behind in a passive role vis-à-vis the new model. Though Carrefour made efforts to transform by coming up with online shopping channels as well as small convenience stores, it failed to turn the situation around.

Beijing retail, large and small — Photo: Markus Winkler

Carrefour is the epitome of this era of changes. It witnessed the profound changes that the Chinese market went through and the successes and failures within it. When Chinese people started to pursue high quality development, upgrading and stratifying their consumption, they also affected the providers of goods and services. More than one billion consumers embraced internet with huge enthusiasm. The power that drives forward this market is bound to be different from that of 2001 when China had just joined the WTO, and very distinct from that after 2008, when China became the world's biggest internet market.

Carrefour was once the beneficiary of China's opening process. But when it failed to cope with competition in a more effective way, it was left behind by this same process.

Carrefour's case, however, doesn't constitute a footnote for those who believe that foreign investments in China are declining. The trend of foreign investment in China has not changed. According to the latest UN report, China still maintains the second position for global foreign capital inflows. And according to data from China's Ministry of Commerce, in the first five months of 2019, foreign investment in high-tech manufacturing and high-tech services has largely increased: the actual use of foreign capital in the high-tech industry has increased by 47.2% year-on-year.

China's new round of high-level opening to foreign companies has begun.

Thus, the real trend is that operations by multinationals in China are reshaping. This is the choice of the market and also the choice of consumers. China's new round of high-level opening to foreign companies has begun. Relevant policies in the fields of finance, automobiles, credit and medicine have been launched. Meanwhile a new revised list of foreign investment access will also be released.

The span and depth of China's opening-up will be expanded. Compared with the time when China had only just entered the WTO, this is a market with greater carrying capacity and potential. Nevertheless, for multinationals that wish to succeed in China, they ought to understand first how China's 40 years of reform and opening-up has changed its market and its consumers — before they step on the gas pedal.

It should be noted that it is precisely the area that first opened up to global competition that gave birth to the batch of Chinese companies that has finally taken the lead from the foreign ones. Chinese people should be grateful for all those years they were accompanied by Carrefour.

The history of business evolution in China carries the memories of all the companies that have worked and strived in China. Their names are part of the commercial glory, whether they are born locally or from overseas.

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Society

What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel

-Essay-

BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.


Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

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