The Knowledge Economy

Essay by crazyhumUniversity, Master'sA, October 2010

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The Knowledge Economy

Current Economic scenario in Retail Internationalisation Strategies

While the volume of academic research on retail internationalisation has increased dramatically, understanding of the economics of retail internationalisation is still far from complete or comprehensive. Existing theories and analytical frameworks fail to capture or fully explain retail internationalisation as it is now happening (Dawson, 255).

The search for a deeper understanding of the process of retail internationalisation is becoming more important as global retail concentration appears to be intensifying. The 1990s was an important decade for the development of international retailing. During this period there was a marked shift towards foreign direct investment and away from less intensive forms of internationalisation such as franchising (Myers, 25). In particular, there was a significant intensification of retail concentration in Europe driven by the merger and acquisition activities of powerful retailers, such as Carrefour, Ahold, Metro, Tesco and Wal-Mart. The opening up of the hitherto closed economies of Central and Eastern Europe and the People's Republic of China has helped to catalyse international competition between the major retailers.

This paper focuses on the knowledge economy of global competition for retail customers in the fast moving consumer goods (FMCG) sector in the People's Republic of China. It does not cover Hong Kong SAR or Macao SAR. The analysis is centred on two issues: the most important factors of the Chinese market to international FMCG retailers and the long-term strategic objectives of public policy behind international expansion in China. The first section of the paper presents a brief review of the literature on the factors and motivation behind retail internationalisation and an overview of the retail sector in China. Finally an evaluation is provided of the likely effect of recent public policy changes and China's accession to World Trade Organisation (WTO) membership on...