WalMart Plans Retail Expansion In China
Paul Denlinger's
Speaking Calendar:
--Localization
World, Nov. 16, San Francisco
The US-based retail chain WalMart is planning to expand
its network in China by adding at least 10 stores in 2005.
The Chinese government will lift its restrictions on
foreign retail chains in December, allowing them to compete
freely against domestic Chinese retailers. While all major
retailers already have a strong presence in China's major
cities, restrictions on the number of retail outlets have
slowed penetration into China's second-tier cities where
domestic Chinese retail firms have an advantage. The lifting
of this restriction means that they will no longer have
to decide between focusing on the major cities of Shanghai,
Beijing and Guangzhou, or expanding into the second-tier
cities. Now, they will be able to do pursue both strategies
at the same time.
This restriction has meant that Chinese firms have had
deeper penetration in Chinese cities when it comes to
logistical and distribution operations. WalMart has an
advantage in the scale of its logistical operations, since
it has worldwide operations, but the restrictions in China
have limited its penetration.
The Chinese retail market is now the most competitive
in the world, with high turnover taking place. All chains,
including WalMart,
have been aggressively expanding their presence. The current
expansion requires large amounts of capital, and smaller
companies are getting acquired
as the market consolidates.
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