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With a Little Help from My Friends: Multinational Retailers and China's consumer Market Penetration

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  • Charlotte Emlinger
  • Sandra Poncet

Abstract

We study the growing presence of multinational retailers and its role for imports in China. To identify the causal effect of foreign retailers entry on the local import intensity, we use sector and origin country level import data for a panel of Chinese cities between 1997 and 2012 and differentiate between retailer and non retailer goods, and, in a second step, we exploit information on the multinational retailers' headquarters countries. We find that a relative rise in retail imports in cities where multinational retailers settle, which is sharper for imports from the country of origin of the retailer. Our results suggest that a 20% higher multinational retailer presence, amounting to one additional hypermarket in 2012, induces a relative rise in imports in retail goods of 2.8% compared to non retail goods. The import relative gains rise to 5.6% for the multinational retailers' headquarters countries. We find that the observed effect is mainly driven by the food products, which is consistent with the appeal of Western gastronomy and with the structuring role of retail branded products. Our results suggest that global retailers bridgehead for the penetration of the Chinese market by producers from their home base.

Suggested Citation

  • Charlotte Emlinger & Sandra Poncet, 2016. "With a Little Help from My Friends: Multinational Retailers and China's consumer Market Penetration," Working Papers 2016-01, CEPII research center.
  • Handle: RePEc:cii:cepidt:2016-01
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    References listed on IDEAS

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    1. Angela Cheptea & Charlotte Emlinger & Karine Latouche, 2012. "Multinational Retailers and Home Country Exports," Post-Print hal-01208840, HAL.
    2. Beata Javorcik & Wolfgang Keller & James Tybout, 2008. "Openness and Industrial Response in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers," The World Economy, Wiley Blackwell, vol. 31(12), pages 1558-1580, December.
    3. Cheptea, Angela & Emlinger, Charlotte & Latouche, Karine, 2014. "Do exporting firms benefit from retail internationalization? Evidence from France," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182706, European Association of Agricultural Economists.
    4. Javorcik, Beata S. & Li, Yue, 2013. "Do the biggest aisles serve a brighter future? Global retail chains and their implications for Romania," Journal of International Economics, Elsevier, vol. 90(2), pages 348-363.
    5. Horst Raff & Nicolas Schmitt, 2012. "Imports and the structure of retail markets," Canadian Journal of Economics, Canadian Economics Association, vol. 45(4), pages 1431-1455, November.
    6. Robert C. Feenstra & Gordon H. Hanson, 2004. "Intermediaries in Entrepot Trade: Hong Kong Re-Exports of Chinese Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(1), pages 3-35, March.
    7. Cédric Durand, 2007. "Externalities from foreign direct investment in the Mexican retailing sector," Cambridge Journal of Economics, Oxford University Press, vol. 31(3), pages 393-411, May.
    8. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    9. Angela Cheptea & Charlotte Emlinger & Karine Latouche, 2015. "Multinational Retailers and Home Country Food Exports," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 159-179.
    10. Head, Keith & Jing, Ran & Swenson, Deborah L., 2014. "From Beijing to Bentonville: Do multinational retailers link markets?," Journal of Development Economics, Elsevier, vol. 110(C), pages 79-92.
    11. Emek Basker & Shawn Klimek & Pham Hoang Van, 2012. "Supersize It: The Growth of Retail Chains and the Rise of the “Big-Box” Store," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 541-582, September.
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    More about this item

    Keywords

    Multinational retailers; China; Imports;

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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