SUPERMARKET giant Tesco has been accused of failing to understand the Chinese consumer after falling sales saw the retailer announce plans to abandon its solo plans and form a joint venture in China.
Qing Wang, professor of marking and innovation at Warwick Business School, claimed that the Chinese market was “unsuited” to the retailer’s “secret weapon” – its loyalty Clubcard – due to fierce competition.
Instead, Tesco should have “looked into the cultural differences in China compared to the UK before investing in the second-biggest economy in the world”, Wang said.
He said a majority of Chinese consumers have loyalty cards from at least four retailers, which means “any information held on one store card is incomplete at best and misleading at worst, and is thus not fit for the purpose as Tesco intended”.
Wang said: “Tesco turned up late to the party in China, only opening its first store in 2004. Rivals like Walmart, which entered China in 1996, were able to gain an early advantage. Though it entered the country eight years later than Walmart, Tesco believed it could catch up thanks to its successful Clubcard system pioneered back home.
“But the participants in our research believed that these loyalty programmes offered many similar attributes, such as the type of product information and promotions provided and the criteria for collecting rewards. Meanwhile, the store loyalty is low as customers tend to switch stores to look for bargains.”
Last month Tesco revealed plans to put its Chinese oeprations into a joint venture with China Resources Enterprise, creating a business with sales of £10 billion in which Tesco will have a 20 per cent stake.
Tesco declined to comment yesterday on Wang’s research.