Wal-Mart aims for China and India

02 October 2009

KUALA LUMPUR: Wal-Mart, the US retail giant, is optimistic about its prospects in the key emerging markets of China and India, and predicts Asia will be the driving force behind any improvement in the global economic climate.

Speaking at a conference in Malaysia earlier this week, Robson Walton, chairman of the world's biggest retailer, also warned that the end of the recession was not close at hand.

"The world recovery is going to be led by Asia although it's going to be very challenging. I think this recovery is going to be a slow one," he said.

While the Arkansas-based firm has been one of the few companies to have benefited from the downturn, as shoppers trade down to cheaper brands, Walton said "sales have been tough."

In this context, Wal-Mart's aim is to "resonate with people and save people's money so that they can live a better life, more so in challenging times," he continued.

Among its other main initiatives in responding to the financial crisis are to reduce its costs, develop smaller, more efficient stores, and increasingly move into urban areas.

Walton also predicted that consumers would continue to buy "health care products, drugs and medicines, clothes for their children but not for themselves, and food to cook rather than eat out."

In the last quarter, the American corporation's net sales declined by 1.4%, as an improvement of 0.3% in the US was offset by the decline of 5.1% posted by its international arm.

Despite this, Walton said Wal-Mart's operations outside of its home market currently contribute around a third of sales, a figure it is keen to increase.

"Internationally, we're focusing on larger markets. China is a big opportunity for us. We're just getting started in India, where we see great opportunity over the long term," he said.

At present, Wal-Mart operates more than 250 stores in China, and also launched its first wholesale outlets in India in May this year, in partnership with Bharti Enterprises.

While foreign companies are not permitted to sell goods directly to consumers in India, it plans to invest some $100 million (€68.8m; £62.6m) in the country, and open as many as 15 further outlets, in the near future.

"We are planting the seeds that will grow but that will be some five to ten years," Walton concluded.

Data sourced from Associated Press; additional content by WARC staff