In April, Amazon announced that it would withdraw from the Chinese market due to fierce competition from domestic brands. The US company has joined Carrefour, a French retail chain that announced an agreement with electronics retailer Suning.com, which will mark its withdrawal from China. The deal involves Suning’s purchase of 80% of the company’s Chinese business, and if the retail giant chooses to completely withdraw from the market, it can purchase the remaining 20%.
The announcement caused Carrefour’s share price to soar as investors have accepted the divestiture from China, while China’s sales have fallen and the company has been suffering from operating losses. According to reports, the retail giant has been trying to do business in China for many years, and the business has existed since 1995. Unfortunately, sales fell by 5.9% to 4.1 billion euros and its operating loss was 32 million euros, so it still looks pessimistic.
The Chinese market is not a favourable market for foreign companies due to fierce competition from domestic competitors and the growing online market pressure on existing companies. In addition to Carrefour, other Western retailers such as Tesco Plc and Wal-Mart also sell their Chinese business stakes to domestic brands. Amazon plans to close its online store in China next month. According to reports, German wholesaler Metro AG has as many as 93 stores in China and hopes to sell its Chinese subsidiaries in a broader corporate restructuring.