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As the world economy shifts towards services, transnational corporations ( TNCs) in the service sector have accelerated their expansion in emerging economies. This paper examines the development and embeddedness of foreign hypermarket retailers in China. It also analyzes the spatial penetration patterns of retail TNCs, the impacts of home and host economies on their local embeddedness, and how they resolve the structural paradox between enforcing standardization and conducting localization. The expansion of retail TNCs has been influenced by the gradual liberalization policies of the Chinese government. Spatially, they expanded in two directions: from the eastern costal region to the central and western hinterland, and along China's urban hierarchy from larger cities to smaller cities. While home economies greatly influenced their initial strategies, foreign hypermarket retailers are constantly adjusting to better embed in the Chinese market and to more effectively resolve the structural paradox. [ABSTRACT FROM AUTHOR]