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Wal-Mart’s China Growth Under Way

As requirements for foreign retailers doing business in China are expected to loosen next month, Wal-Mart looks to open 10 stores there next year.

NEW YORK — As requirements for foreign retailers doing business in China are expected to loosen next month, Wal-Mart Stores Inc. is poised to expand its presence there.

The company expects to open at least 10 stores in China in 2005, according to an initial Reuters report filed early Tuesday following the opening of Wal-Mart’s 40th store in that country. The Bentonville, Ark.-based retailer previously said it plans to operate 43 stores in China by the end of this year.

In December, Beijing will give foreign retailers greater access to China’s retail sector by cutting geographic and joint venture requirements along with minimum turnover and asset criteria.

Wal-Mart will likely continue to partner with Chinese firms, however, as it looks for opportunities in the outskirts of China’s bigger cities. According to Reuters, the company has invested 1.6 billion yuan, or roughly $193 million, in China.

“We do not see ourselves, and have no immediate plans, to move away from a partnership structure,” Reuters quoted Wal-Mart chief executive officer, Lee Scott, as saying.

“Wal-Mart evolved by starting in smaller cities and moving into the larger cities. China’s been a little bit of the reverse of that,” said Joe Hatfield, ceo of Wal-Mart Asia, at a news conference in Beijing. “We visited many provincial cities over the last three to four months in preparation for approval from Beijing.”

According to its Web site, Wal-Mart entered China in August 1996 when it opened a supercenter and Sam’s Club in Shenzhen. The company now has 34 supercenters, three Sam’s Clubs and two Neighborhood Markets and employs more than 20,000 associates in the country. Globally, Wal-Mart operates more than 5,000 stores.

Meanwhile, another international retailer, Germany-based Metro AG, said Monday it will open 10 more stores in China next year and have a total of 23 units by the end of the year, according to Reuters.

Metro AG said in an Oct. 29 press release discussing third-quarter results that it plans to spend 1.8 billion euros in overall international expansion in the fourth quarter.

Hans-Joachim Korber, chief executive officer of Metro AG, said in the statement that the company will “spare no effort to press ahead” with its internationalization strategy in the future.

And France’s Carrefour SA said last week it would expand its presence in China by adding about 20 hypermarkets in the country as well as expand its Champion supermarket business. The retailer expects to operate 10 to 15 Champion-branded stores in China by 2005. The company has 53 stores in China already.

— Meredith Derby