Wal-Mart plots China growth

29 August 2011

BEIJING: Wal-Mart, the retail giant, is targeting small cities and ecommerce as it seeks to drive revenue growth in China.

The company currently operates more than 350 stores in China, where it has 95,000 employees, compared with a total of just 70 branches and 30,000 staff in 2007.

Ed Chan, CEO of Wal-Mart China, revealed the Asian country yields "less than 10%" of Wal-Mart's international sales at present, but "may one day be the biggest" retail market globally.

"We have been growing with the Chinese retail industry over the past 15 years and we are very satisfied with our performance," he told the China Daily. "Since 2007, Wal-Mart China has been maintaining double-digit growth."

A core component of the US multinational's strategy has been widening its geographical reach, given that shoppers outside major urban hubs like Beijing and Shanghai are becoming increasingly affluent.

"So far, 80% of our Chinese stores are in second-, third- or even fourth-tier cities," said Chan. "I believe the lower-tier cities will see faster economic development than first-tier ones. So, Wal-Mart China will increase its investment in lower-tier cities."

Alongside expanding the Wal-Mart and Sam's Club networks, Wal-Mart is starting to rebrand many stores run by Trust-Mart, an indigenous chain in which it bought a 35% stake in 2007, and is now awaiting antitrust approval to secure the remaining share.

Online retail forms a second key element of Wal-Mart's future plans, having set up an ecommerce centre in Shanghai and acquired Yihaodian, a local digital pioneer selling grocery, baby care, apparel and consumer electronics products via the net.

Forrester, the research firm, has predicted Chinese internet retail revenues will be worth $159.4bn in 2015, measured against $48.8bn in 2010, indicating the size of the opportunity going forward.

As well as using the web as a sales tool, Wal-Mart is experimenting with utilising microblogs and mobile phones as marketing channels to engage consumers, Chan said.

It has also appointed Steve Smith as its new chief marketing officer in China, and named Sean Clark as COO of its domestic operations, part of a broader high-level reshuffle.

"The recent changes in our management level and the promotion of local staff are aimed at localising personnel," said Chan. "And we are confident that the mix of Wal-Mart global talents and strong local leaders will guide the company to further success in this booming market."

Data sourced from China Daily; additional content by Warc staff