Yet another behemoth global retailer has fallen in China. Tesco, the 3rd largest retailer in the world has announced that it is pulling out of China.This is the highest profile retailer to leave China since Home Depot announced it was closing all of its stores and rethinking its strategy in China. Tesco leaves China
Whenever I see a story like this I immediately think of the millions of dollars of that was probably spent on feasibility and marketing studies, the end result being that the research was just wrong. The reality is often different than what is on paper I like to say. I have been going to China for 25 years now and I could have told Tesco it wouldn’t work for them in China for a fraction of what they probably paid their own consultants. All you have to do is know China’s history. In his book On China, Henry Kissinger describes China in the early modern period
China traded with foreigners and occasionally adopted ideas and inventions from abroad. But more often the Chinese believed that the most valuable possessions and intellectual achievements were to be found within China.
Since China opened its doors to the world in 1978 the refrain has been that China will be a big market for foreign companies. This has become a platitude. With a few big exceptions, mainly Global corporations like Coca Cola and GM that have a long history in China ( Coca Cola first sold its product in China in 1928 and GM in the 1930s) and that can go into any country and succeed because of their sheer size overseas companies that have tried to sell into China have not fared well. China is like Anthemusa, the island where the Sirens lived. The Sirens were beautiful creatures, part woman, part bird but to reach them was impossible because of the rocky shores and cliffs surrounding Anthemusa. The coast of Anthemusa, it was said, was littered with shipwrecks – those who had heard the sirens song and who had tried to go ashore but had perished in the attempt.
China’s rapidly growing middle class consumer market is a Siren’s Song. Government regulations and bureaucracy, extensive language and cultural barriers, latent nationalism and xenophobia, of which Kissinger speaks, rampant corruption are the crags and cliffs that ultimately result in shipwreck for many companies, big and small, that try to go ashore in China.
So the next time you hear about how China’s grwoing middle class means opportunity for you, do as Odysseus did. Plug your ears with beeswax and focus on growing your business where it counts most, in your own country.