The Process of Retail Internationalization in the Chinese Market: A Case of Japanese Fashion Company

Abstract

Since China's ingress into the World Trade Organization (WTO), to a greater extent, multinational business enterprises have entered the market. Fashion industries, for instance, led by European and American apparel retailers, including many Japanese companies, have begun to pay attention to the Chinese market. This is embodied in diverse formats of retailing outlets with international expansions. The intent of this paper is to present an empirical study for improving the framework of retail internationalization processes in the Chinese market, and to provide a perception of the interface between retailing and building customer relationship. Case studies approach is employed in this study to build theories. The objectives of this research are (1) to investigate the processes and barriers of entering the Chinese market by looking at a case study of a Japanese fashion retailer; (2) to clarify the characteristics of each stage of international expansion by applying dynamic capabilities based on a framework that makes a distinction between a firm's first stage, second stage and third stage; and (3) to indicate the emergence of a new retail format, called a "house brand store," and its important role in retail internationalization and customer relationship management.

The Current Research Issues of Retail Internationalization

“…Additionally, only a few research paid attention to SME retailers (Hutchinson et al, 2006)-especially retailers which are in emerging countries. However, SMEs practically have great potential and capabilities in international markets with strong concepts, store formats, and merchandise assortments (Alexander & Quinn, 2001;Hutchinson et al, 2006;Miao, 2017). Thus, instead of questioning whether or not small retailers can implement their internationalization, academic and practical researchers should investigate how small retailers could develop international marketing better in diverse industries and markets.…”

“…We can see some international retailers have recently been attempting to provide a superior shopping experience through their store environment and multiple channels in order to increase the possibility of customer revisitation and customer loyalty. For example, some retailers are building a greater variety of store formats (Miao, 2017); store-based retailers tend to participate in e-commerce (Gensler et al, 2007).…”

“…But, they also have some competitive advantages, such as entrepreneurial vision and networks (Hutchinson et al, 2006). Some studies presented that SME retailers have great potential and capabilities in international markets with strong concepts, inventive store formats and merchandise assortment (Alexander & Quinn, 2002;Hutchinson et al, 2006;Miao, 2017).…”

“…Today, retailers who operate in the multinational arena have become robust with their holistic marketing plans that are focused on the development of private label products and reinforcement of brand value through the use of inventive store formats and multiple retail channels (Miao, 2017). We can see this in the success of the great grocery stores (Walmart, Whole Foods), apparel merchants (GAP, H&M, ZARA), online shopping websites (Amazon, etc.).…”

“…Furthermore, we can see many successful examples in implementing internationalization. For instance, some fashion retailers internationalized rapidly by adopting an agile global supply chain (Brun & Castelli, 2008), offline and online channels (Wrigley & Currah, 2006;Premazzi et al, 2010), and various store formats (Dawson & Mukoyama, 2014;Miao, 2017). And the fact that there are even some small and medium sized (SME) retailers that have developed international markets successfully shows that firm size is not a significant factor anymore when internationalizing (Vida et al, 2000).…”