May 10, 2012
Wal-Mart wants to grow in China to become the largest retailer as it seeks to recreate the success it often met on other markets according to Scott Price, chief executive of Wal-Mart’s Asia division. China is an important market for it as the world’s largest economy posted retail sales up 15% to $ 783.03 billion in the 1st quarter according to the American National Bureau of Statistics. Grocery sales are expected to grow by 11% between 2012 and 2015 to $ 1.5 trillion compared with sales up 4.2% in the U.S. during the same period according to IGD.
In China, where it operates 379 stores since it entered the market 15 years ago, Wal-Mart is facing several challenges including one with its employees in Chongqing. In fact, a certain number of them was arrested and detained in October for mislabeling of ordinary pork sold as organic meat. This event pushed it to create a new structure to supervise the food security in its stores. In addition, according to analysts, Wal-Mart did not create the image of offering the lowest prices in China like in the U.S and other markets. With low profit margins between 2 and 3% in this country, it seeks to reinforce its presence to win in the long term as it took it 12 years to be profitable.
Competition is also another challenge: sales in China of its main rival, Sun Art Retail Group, rose 21% in 2011 to $ 10.6 billion with 230 stores and Sun Art still has 153 more units in the pipeline. Wal-Mart unveils its sales in China for 2010 only: they totaled $ 7.5 billion with 328 stores. Among its other projects, the final acquisition of a major stake in the Chinese online retailer Yihaodian.
