Wal-Mart plans China web push

28 June 2011

SHANGHAI: Wal-Mart, the retail giant, is establishing a new ecommerce hub in Shanghai, as it seeks to exploit rising digital literacy and demand levels among Chinese web users.

The US multinational has signed a Memorandum of Understanding with the Shanghai Municipal Commission of Commerce regarding building this specialist unit in the city.

Such a move marks an acceleration of Wal-Mart's efforts to tap China's "booming" digital market, after acquiring a stake in Yihaodian, launched in 2008, and now selling 75,000 products via the internet.

"The scale of online sales in China is expanding rapidly and is projected to match US online sales in the next few years," said Wan Ling Martello, Wal-Mart's EVP, global e-commerce, emerging markets.

"We are very optimistic about China's e-commerce market and its growth potential."

"With Shanghai as our global e-commerce China headquarters, we look forward to offering Chinese consumers a wider selection of quality products at good value with a great online shopping experience."

Under the terms of the deal, Wal-Mart committed to bringing superior technology and talent to Shanghai, alongside assisting the authorities concerning training and infrastructure development.

"China is one of the most strategically important Asian markets for Walmart," said Scott Price, president and CEO, Wal-Mart Asia.

"We are attracted to China's investment environment and especially to Shanghai because of its status as a financial center, burgeoning e-commerce environment, and its abundant local talent."

"Global e-commerce is expected to be our new growth engine."

Figures from the China Internet Network Information Center suggested 161m people - often young, affluent shoppers - bought goods online in 2010, a 48.6% lift on an annual basis.

Insights provider iResearch also reported web retail sales reached 461bn yuan ($71.1bn; £44.5bn; €50bn) in China last year, a 75% improvement measured against 2009.

Wal-Mart's e-commerce push forms part of a broader drive to increase sales in China, where the discounter operates over 300 stores.

Doug McMillon, president and chief executive of Wal-Mart International, believes the organisation's Chinese business could ultimately compete with the US in terms of size.

However, he also recently told a shareholder meeting that it might prove extremely difficult for the company to assume the number one position in the world's most populous nation.

"[That was] really just a recognition of how big the market is, how diverse the market is, how fast it is growing and how many competitors are in it," he said.

"We would like to see every-day low prices implemented in the not-too-distant future, more successfully in China."

To achieve this goal, Wal-Mart is tasking staff from America to work on enhancing its Chinese capabilities in these areas.

"We have asked some people to go over who have experience with Every Day Low Price and Wal-Mart, to get us to a new phase and help make even more progress," said McMillon.

Data sourced from Wal-Mart, Wall Street Journal; additional content by Warc staff