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This is the second of a two-case series (204-187-1 and 204-188-1). China was a market full of temptation for MNCs (multinational corporations). However, it set strict restrictions to protect domestic retailers. Though China did have a plan of opening the domestic market to foreign retailers step-by-step, it seemed to be beyond the patience of retail giants like Carrefour. As a result, many foreign retailers managed to expand in a secret but illegal way in China. Carrefour found that local governments had a strong motivation for introducing foreign retailers for the sake of employment and taxation benefits. With the help of local governments, Carrefour quickly established footholds in China''s major business cities and developed itself into the No 1 foreign retailer in China. It was not hard to imagine that the illegal expansion irritated local retailers and the central government. Then the central government issued circulars and regulations one after another to warn foreign retailers and local governments, who just turned a deaf ear to the warnings. In 2001, rumours spread that Carrefour would be shut out and the central government would not appease any more. It seemed that Carrefour would have to do something to avoid disastrous outcomes.