Importance Of Home Depot In China

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Introduction

China's economy is the second largest in the world, and is predicted to eventually pass US's economy. This makes China's market a prime hotspot for companies around the world to target to try to grasp some market share and profits. However, China's unique and heavy emphasis on culture and strong government practices make China's market place a very difficult for foreign firms to enter and do business successfully. One example of a US firm attempting to pry into the Chinese business world is Home Depot, but this firm wasn't able to sustain business in the country. Home Depot failed in its attempt to enter China and it's important to take a deeper look into why this happened. Foreign firms that enter China must first develop a business strategy that is catered to the specific target country, and if it doesn't work that is okay, but you must at least then be adaptable to change that strategy, but firms should always try to show respect and blend in to local culture.

Background

China expects its urbanization rate to rise from 47.5% in 2010 to 51.5% by the end of 2015, according to the 12th Five-Year Plan (Xinhua News Agency, 2011). Clearly, the Chinese economy is booming and China is quickly urbanizing. Investment analyst Meyers (2011) stated that a home improvement company such as Home Depot is very sensitive to positive economic growth, especially the growth in housing and urbanization areas. A booming housing market such as the one in China should boost the business of Home Depot.

Why Did Home Depot Fail?
However, Home Depot pulled out of China after six years of losses. US firms typically think if a business is god enough for Americans, that it is also good enough for others too. Home Depot never found t...

... middle of paper ...

...res would be very appealing and would need to focus on being fashionable, urban, tech savvy, female friendly, and provide great customer service. These UBS stores should leverage the iPhone and iPad and perhaps make user friendly mobile applications that consumers can download free of cost and use to shop, request service, and learn about home needs. Further, these stores need to concentrate on female customers. Women are key household decision-makers in North America and in Asia, and typically decide what and where to shop. This means there could be a lot of reward for a company that makes home improvement easy to implement. It would be highly beneficial to have a wide selection, appear in the luxury segment, have friendly customer service that help and offer advice, have a reputable brand,
Home Depot needs to find a way to give the perception of Western luxury.

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