Carrefour Case

CARREFOUR CASE

Thomas Avenati, Dennis Debosschere, Jingyuan Zhang, Richard Liu, Wenzhu Jiang

Why did the Chinese people chose the French retailer Carrefour as the prime target of boycott and no other French business?

 Carrefour was an obvious target because of its visibility and accessibility

 Visibility: one of the largest foreign retailers in China with 112 stores in 39 cities and plans to open 20 more every year => large customer base compared to other known French brands as Louis Vuitton and Dior

 Accessibility: both rich & poor people go to Carrefour but there are also a lot of (Chinese) alternatives where they can buy their goods => "Chinese consumers were raising their expectations for multinational firms operating & profiting in China. They believed that the Carrefour boycott symbolized such a change: Chinese consumers stood up against Carrefour and the Internet has provided a voice. Their purchasing power has given them a hearing." (p. 8-9)

 Weak corporate image and not seen as a social responsible enterprise in China

 LVMH group – one of their major shareholders – was accused of donating money to the Dalai Lama

 Various incidents regarding Carrefour's services, product quality and integrity were reported from time to time (p. 14)

 Carrefour's indirect route for entering the Chinese market to avoid restrictions and approval procedures lifted by the Chinese government which allowed them to operate without restrictions (p. 10)

 Although they started the CIF (= Carrefour International Foundation) (p11) their ‘illegal' Chinese market entry, the entrance fees for suppliers* and the problems with the ‘limited-time promoted products' action were bad for their ‘good citizen image'

=> all these incidents together can cause the ‘horn effect': a cognitive bias in which one's judgments can be influenced by one's overall impression of a person / company

 *Competitive relationships with suppliers

Aggressive culture with suppliers: aim was to squeeze the suppliers by making them pay high listing fees, promotion funds, etc. => good profit figures for Carrefour, but violation of the principle of a fair and mutually beneficial business relationship (p. 13) => consumers realized that Carrefour's benefits came from these Chinese suppliers* => stand up in the same party to ‘fight' Carrefour

*Carrefour's major success source was their commitment to local suppliers, meaning that 90‐95% of their products are produced locally varying from country to country.

 Bad