Business Rocks: Attractive Markets Aren’t Always So Great

It was announced this week that New Look, the UK fashion retailer, is exiting from the Chinese market and closing its 120 stores. New Look’s Chinese failure follows in the footsteps of other major retailers, including M&S, Home Depot and Tesco.

China is the world’s second-largest consumer and retail market and has attracted investments from thousands of companies, both large and small. The size, growth and potential profitability of the Chinese market is a huge pull for any investor.

All of these enterprises face a strategic truth, however: it’s not the size or attractiveness of the market that determines your ultimate success. Instead, it’s your ability to establish and exploit clear competitive advantages that makes the difference.

Like its failed predecessors, New Look, was unable to establish advantages in China that enabled it to attract sufficient numbers of customers or produce the returns required to justify its investment.

And what’s true for New Look in China is similarly true for your business, whether your operating in Asia, Europe or the UK alone. Finding and spotting attractive new market sectors to enter is a key element of business growth, but only if you are able to profitably differentiate from your competitors.

What are your company’s competitive advantages, and what steps are you taking to identify build, sustain and create advantages that will drive your future success?