|dc.description.abstract||Foreign direct investment (FDI) in food retailing has generated a considerable
amount of attention in both the media and the business world throughout the 199Os,
with a strong focus on Asian and Central and Eastern European countries. Among
these countries, China is a key player and a nation that no international retailers can
afford to ignore due to its population size of 1.2 billion and its rapid economic
development. Food retailers from different parts of the world have been keen to use
their modern retail concepts and technology to seek expansion opportunities in
China. Consequently, two important questions emerge: What does the process of FDI
in food retailing entail? Is the retail and distribution market in China easily entered?
Regarding the first question, substantial research effort has been vested in this topic.
However, a conceptual framework that incorporates the whole scope and complexity
of the process is still lacking. For the second question, a prudent scrutiny reveals that
foreign food retailers are confronted with a lot of complications due to the legacy of
the previous command economy and the unique Chinese social and business
The thesis develops an analytical model in which critical variables, and their logical
relationships, are used to analyse and explain the process of FDI of food retailers in
the contemporary era, using China as the domain for the empirical work.
Methodologically, the study adopts a qualitative approach using case studies with
thirteen foreign food retailers in China. The research focuses on three main areas:
long-term strategic objectives behind retail international expansion, market entry
issues, and retail operational issues.
Firstly, the long-term strategic objectives that underlie retailers’ undertaking of
foreign direct investment are investigated. Evidence shows that the prevailing
concept of reactive retail internationalisation and the tenet of psychic distance do not
fully reflect the reality of retail internationalisation.
Secondly, three issues related to market entry are explored. The first issue is the legal
and regulatory infrastructures that foreign retailers face when entering China. The
second issue is the selection of Chinese partners, managing partner relationships and
the share of managerial control. The third issue is the technical and political
procedures of site selection and store development. The empirical work reveals that
the lack of a systematic and well-developed legal system complicates the process of
foreign direct investment and having a Chinese partner who possesses the
appropriate guanxi network alleviates the problem. Furthermore, the exercise of
dominant control over operational and managerial issues is practised by the foreign
retailers in their joint ventures. Significant conflicts between partners appear not to
exist under such an arrangement. On the other hand, political procedures of site
selection and store development are found to be onerous. In terms of technical
procedures, respondents reported that the methods that are being used in developed
countries are not entirely applicable in China.
The third area on which the research focuses is operational issues that foreign food
retailers confront in the host countries. These include supply chain management;
adjustment and adaptation; and development of human resources. Findings suggest
that there are two types of retail know-how: core and peripheral. No changes to core
elements should be made in the overseas operation so that the uniqueness of the
individual retailer is preserved. Adjustments, however, have to be made to peripheral
elements in order to match particularities of local consumer demand. A learningoriented
culture within a retail organisation is found to be an important underlying
element that contributes significantly towards successful retail internationalisation.
Taking a holistic perspective, the foreign direct investment behaviour in the retailing
sector and the manufacturing sector, from which the prevailing foreign direct
investment theories were developed, appear to be very different. The foreign direct
investment behaviour of retailers seems to be better explained and understood within
a framework that emphasises market power seeking, stresses the dynamics of
different elements that constitute retail know-how, and underscores the notion of
knowledge accumulation and utilisation.||en