Currently many retailers from the United States and Europe attempt to enter Asian countries, which have recently become open to free trade. This paper aims to discuss the strategies they employ in order to gain competitive advantage and the peculiarities of consumer behavior in this region. At first, it should be pointed out that Asian market is extremely heterogeneous, which means that these states differ in terms of population density, purchasing power of the citizens and intensity of competition (Krafft & Mantrala,101).
These are the factors that should be taken into account by the management. Many international retailers like Wal-Mart, or Carrefour gravitate to the regions where the level of financial welfare has risen over recent years: namely Taiwan and China (Dawson, 41). Furthermore, there are no barriers to entry such as presence of domestic firms. In contrast, they are less successful in Japan, due there are many local retailers, which can enter into price war with foreign companies (Krafft & Mantrala, 101).
It should be noted that buyers in this region are not concentrated, and there are not large-volume clients in Asian market. On the one hand, this means that customers cannot dictate terms to the foreign companies, which operate in their country. Actually, large-volume customers are rather unlikely to appear in retail industry. Still, one should not presume that the bargaining power of clients is small.
The thing is that products, offered by Carrefour or Wal-Mart are not differentiated or unique in any way, and the clients can find alternative suppliers (Alexander, 116). This goes for food, drinks, clothes etc. So, consumer can choose the firm that offers the best price-quality ratio. Additionally, we should not forget that consumers in Asia face virtually no switching costs, in other words they can go from one supplier to another, and they would incur no expenses. This situation can be observed in Japan (Dawson & Lee, 153). This is one of the reasons why international retailers have to fit their prices toward their needs.
As far as profitability of the customers is concerned we cannot make any generalizations. In Taiwan or Malaysia, the population is more price-sensitive, as their income level is not very high, whereas in Japan, buyers are more well-to-do; therefore, they attach importance to the quality of the products, rather than the price. On the whole, we can argue that Asian buyers do not pose a threat of credible integration because it is more typical of wholesale trade rather than retailing.
Finally, we need to say that that the quality of the buyers products is not affected by the industrys product. This means that foreign retailers do not sell good and services superior in quality to those ones of domestic shops. Yet, it should be borne in mind that this situation is not characteristic of all Asian markets. In Indonesia or Cambodia, the quality of commodities is at a low level, while in Japan or China it is of the highest standard.
Therefore, foreign retailers try to adapt their prices to the needs of Asian population. Normally, it is done by providing discounts to the returned customers and setting prices which are than those ones of domestic retailers. Internationalization of Asian retail market beneficently affects the buyers of this country, as they are now able to choose the store that suits them best in terms of price and quality.
Works Cited
Alexander Nicholas. International retailing. Wiley-Blackwell, 1997.
Chan Tsang-sing. Consumer behavior in Asia: issues and marketing practice. Routledge, 1999.
Dawson John. The internationalisation of retailing in Asia. Routledge, 2003.
Dawson John & Lee Jung. International retailing plans and strategies in Asia. Routledge, 2005.
Dess Gregory, Lumpkin G. T., & Eisner Alan. Strategic Management: Creating CompetitiveAdvantages. McGraw-Hill/Irwin, 2007.
Krafft Manfred & Mantrala Murali. Retailing in the 21st Century: Current and Future Trends. Springer, 2009.