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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.

(For more biz stories, please visit Industry Updates)

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