In April, Amazon announced that it would be exiting the Chinese market due to stifling competition from domestic brands. The US company has been joined by French retail chain Carrefour which announced a deal with electronics retailer Suning.com that will mark its exit from China. The deal involves Suning buying an 80% stake of the company’s Chinese operations with an option to buy the remaining 20% stake if the retail giant chose to exit the market entirely.
The announcement caused Carrefour’s shares to soar as investors are receptive of moves to divest from China where sales have fallen and the firm has been incurring an operating loss. The retail giant has reportedly spent years trying to fix its business in China which has been in existence since 1995. Unfortunately, things were still not looking positive as sales fell 5.9% to 4.1 billion euros and its operating loss was 32 million euros.
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The Chinese market hasn’t been a favourable one for foreign firms as fierce competition from domestic rivals and a growing online market puts pressure on existing firms. Apart from Carrefour, other Western retailers like Tesco Plc and Walmart Inc have also sold stakes in their China business to domestic brands. Amazon is scheduled to close its online store in China next month. There are reports that German wholesaler Metro AG, with up to 93 stores in China, is also looking to sell its China unit amid a wider company restructuring.
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(source)
