This article focuses on the relationship between international retailers' core competences, resources, and strategy in the Chinese context. The authors first review the key concepts and dimensions of core competences, then analyze the field data generated by in-depth interviews with key managers of the main international retail subsidiaries in China. They then point out the impact of the competitive structure of distribution, which is the most important environmental factor in China. Then they describe how an international retail subsidiary in China can create and maintain a sustainable competitive advantage. Finally, they consider the managerial implications of this.