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BIZCHINA / Overseas Investment |
Wal-Mart aims to double China stores in next 5 years(Bloomberg)
Updated: 2007-07-19 16:14 Wal-Mart Stores Inc, the world's biggest retailer, plans to more than double its stores in China in the next five years to tap the country's 1.3 billion people. The expansion will help the Bentonville, Arkansas-based company broaden its reach beyond its 84 stores across 46 Chinese cities. Wal-Mart expects to have a 20 percent share of the country's retail market with the expansion, said Terrence Cullen, Wal-Mart's vice president of China operations. "The Chinese market is huge," Cullen said in an interview today in Singapore. "To date, no real market leader has emerged and our eyes are on market leadership of some sort. What we'll see is aggressive organic growth, probably accelerating each year over the next few years." Wal-Mart is considering buying all or part of Beijing Hualian Hypermarket Co, the UK's Daily Telegraph reported today, citing unidentified people close to the talks. Hualian officials couldn't be reached for comment. Wal-Mart agreed to buy a stake in Chinese retailer Trust-Mart in February. "The quickest way to do it is to buy into local retailers - - it all depends on what price they have to pay for it," said Anthony Teoh, a Hong Kong-based analyst who covers retailers at South China Finance & Management Co. "When you're looking at the valuations in the retail sector, foreigners have to pay pretty steep prices at the moment." Overseas retailers have been expanding in China as the nation opens its domestic market to foreign competition. Per-capita disposable income in towns and cities rose 12.1 percent last year and the country's retail sales increased 14 percent. "Retail demand is growing," said Paul Tang, chief economist at Bank of East Asia Ltd. "Retailers are responding to the Chinese government's 11th five-year plan to boost consumer demand. The overall economy growth is also quite good, and it all helps to increase consumer confidence." Wal-Mart faces rising competition as growth in the world's most populous country draws more retailers. Carrefour SA, Europe's largest retailer, this month increased its target for new stores in China, where it plans to open 20 to 25 outlets a year, up from the previous forecast of 20. China's share of world consumer spending may almost triple to 14.1 percent by 2015, from last year's 5.4 percent, according to Credit Suisse. That would surpass the share of consumer spending in the U.K., Germany and Japan, according to the research. China's 2006 retail sales grew 14 percent to $770 billion, equivalent to one quarter of the US market. |
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