Consumers walk by Gap's flagship store in San Francisco, California.
In Johnson Kim’s Blog, he explores the general trend of American companies to rely on international markets. He discusses the interplay between the Chinese and American economies and states that, “America has slowly been suffocating financially under the stress of the doggie collar the Chinese have placed around its neck”. I agree with this statement, and think that American companies must be careful not to rely too much on the Chinese market. This makes the company vulnerable to both domestic and international economic turbulence, thus increasing overall financial risk for the company.
Gap is one example of an American company turning to international markets. The retailer plans to close several American stores to allow for expansion into China. By the end of 2013, they plan to decrease overall American square footage by 10% while doubling revenue from outside of the US to 30%.
Gap’s recent revamp, however, is not purely a result of the shortcomings in the American economy. Since the addition of competitors such as H&M and Abercrombie&Fitch into the market, Gap has noted a considerable decrease in sales and overall American Revenue.
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