case Home Depot in China

1 . Home Depot 's decision to defer its entry into the China home improvement market may come as a surprise to many people , considering that most industry players are grabbing shares of the market there , with B Q claiming top spot . The economic boom in China which brought about the rapid rise of the home construction industry may seem to be the right signal for Home Depot to enter the market immediately , or risk encountering tougher entry barriers

However , I would agree with Home Depot 's decision to defer its entry because

of two factors . The first factor is cultural- that the home improvement market for China is not what one expects it to be . The reason for this is that labor costs are cheap , thus instead of adopting the Do-It-Yourself concept , Chinese home owners would rather have cheap labor make their cabinets and other furniture than make it their own Thus , it would be very difficult tio penetrate this unique cultural barrier

The second factor is political . It is quite common in China to establish government connections first , before a foreign company can foray into the local market and establish branches or offices . The choice of location of store is dependent on how good the connections are of one company . This presents a tough challenge for Home Depot 's entry also since they will be considered as late market entrants and thus be elbowed out of the prime locations for establishing their store branches

2 . In my mind , the...