Walmart Stores Inc (NYSE: WMT) is considering acquisitions in China as local rivals grow stronger and it is very difficult to simply copy its business practice in the US for operations in China, MarketWatch reported, citing Walmart Asia chief executive Scott Price.
The US retailer is hunting in advanced cities for a larger market share, Price said at the APEC meeting in Bali, Indonesia, without naming the targets and cities. Walmart currently operates 398 stores across 118 Chinese cities.
Walmart is the second biggest player in China's retail market by sales revenue, after Sun Art Retail Group Ltd (HKG: 6808), which is a joint venture by Taiwan's Ruentex Group and France's Groupe Auchan SA. Sun Art runs 284 RT-Mart and Auchan hypermarket chains in China.
Price said joint venturing does not work for Walmart and Walmart does not want to buy hundreds of stores and supermarkets overnight. "What we are looking for are those with at least 10 years of retailing operations in the same city," said Price.
China Resources Enterprises Ltd (HKG: 0291), which operates 4,100 stores in China, recently acquired 131 hypermarkets from British retailer Tesco, posing another threat to Walmart.
Walmart's low price strategy has been effective in China because Chinese consumers would prefer online shopping for cheap goods, according to Shaun Rein, the founder of China Market Research Group.
"Walmart, Sun Art and China Resources Enterprises will be the beneficiaries of the consolidation of China's retail market," argued Vineet Sharma, a consumer industry analyst with Barclays. "Industry shakeup is well underway and bigger players will get even bigger."
Walmart said last year that it planned to open a total of 100 stores in China in the 3 years through 2015. The pace will be slower than in the previous years when it opened 50 to 60 stores annually.
You are currently reading
total words in this article.
To continue reading this article, you must be a subscriber. Log in now..