BEIJING - Wal-Mart
Inc, the world's largest retailer, plans to
accelerate store openings in China and expand into
smaller Chinese cities after the government
relaxed laws on foreign retailers operating in the
country, an executive said.
"With the
lifting of restrictions and with the talent pool
we have accumulated, we can expect that the growth
will speed up a bit," James Lee, vice-president of
corporate affairs for Wal-Mart China, said in a
recent telephone interview from the southern city
of Shenzhen.
Bentonville, Arkansas-based
Wal-Mart plans to open 14 superstores this year,
an increase of a third, to catch up with Carrefour
SA and domestic chains in China's US$652 billion
retail market. Starting in December 2004, China
permitted foreign retailers to open stores without
a local partner to meet pledges made on joining
the World Trade Organization in 2001.
The
government also eased rules restricting foreign
retailers to China's biggest cities and provincial
capitals, giving them full
access to the market.
Wal-Mart is looking at smaller cities such as Yuxi
in the southern province of Yunnan, where it
currently has one store in the capital Kunming,
Lee said.
Wal-Mart, which opened its first
superstore in the country of 1.3 billion people in
1996, has 48 outlets in 23 cities including
Beijing, Harbin, Shanghai and Shenzhen.
Paris-based Carrefour, the largest overseas
retailer in China, had 61 stores in the nation out
of a total of 6,680 worldwide as of the end of
June.
Chinese companies such as Lianhua
Supermarket Holdings Ltd also are expanding to
shore up their market share against foreign
competition. Shanghai-based Lianhua said in April
it aims to add 600 stores this year, expanding
outside eastern China to become a national brand.
As of the end of June, it had 3,377 supermarkets
and convenience stores, from 2,706 a year earlier.
Beijing-based rival Wumart Stores Inc has said
it's sticking to a strategy of expanding around
the national capital area.
Wal-Mart is
counting on faster Chinese growth as its expansion
slows in the US, where higher oil prices are
crimping consumer spending. The company's
first-half sales outside the US rose 12.3% to
$29.1 billion as domestic sales climbed 9.9% to
$99.5 billion. Retail sales in China may expand
13.5% in the second half of this year, spurred by
rising incomes, the Beijing-based Financial News
said last month, citing the State Information
Center.
A dozen large fish tanks filled
with live carp, eel and other seafood dominate one
wall of the fresh food section in Wal-Mart's
Beijing store. Chinese customers "like to buy
fresh and probably make more trips to the store
than in the US or Europe, so we put more emphasis
on food," said Lee. Food typically accounts for
half of total revenue in the company's Chinese
stores compared with 30-40% in other markets, he
said. "Our customer base is also getting more
sophisticated," said Ivan Ho, who managed
Wal-Mart's first Chinese outlet in 1996 and is now
operations manager for northern China.
Wal-Mart also runs a Shenzhen-based
procurement business, sourcing goods from China
for its stores worldwide. Last year, it bought $18
billion worth of goods from Chinese suppliers, up
from $15 billion in 2003. About 90% of the
retailer's stock in China is procured
domestically, according to Ho. "China is the
manufacturer to the world," he said.
