Wal-Mart is poised to buy Trust-Mart Stores in a bold move to overtake Carrefour as the largest western retailer in China.
Winston Wong, the Taiwanese owner of Trust-Mart, has spurned Carrefour and accepted a bid from Wal-Mart worth around $1bn, according to Forbes.
The move more than doubles Wal-Mart’s presence in China where Trust-Mart
operates a chain of 100 hypermarkets. Wal-Mart already has more than 60 of its own stores in China and has said it plans to open 20 more this year.
French rival Carrefour, with 81 stores, is widely viewed to have one of the best China strategies of any western business and has been much quicker to exploit the opportunities offered by China’s burgeoning consumer market. Wal-Mart has preferred to play safe and take its time.
However, this deal could marks a watershed. It gives Wal-Mart the scale it needs and means it does not have to engage
in an expensive and time-consuming land-grab in China’s affluent cities, where the competition for prime locations for new stores is increasing.
By purchasing an entire chain rather than opening new stores, Wal-Mart will be able to bypass cumbersome Chinese red tape and gain critical mass much quicker.
Last month Wal-Mart introduced a credit card with Bank of Communications and HSBC — see this EngagingChina story.
More on Wal-Mart’s China strategy in this Newsweek article, which predicts that Wal-Mart’s China operation could quite
feasibly easily grow to have 1,000 or even 2,000 stores, given the size of the population and “the real hunger” for the kind of retail experience that Wal-Mart and its western rivals offer.
China’s retail market is worth some $240bn, making it Asia’s largest after Japan, although foreign players controlled just 2.6% of the sector in 2004, according to the China Chain Store and Franchise Association.