Wal-Mart set to keep growing

Wal-Mart is opening 21 stores in the first quarter of this year, taking its total in China to 147. CFP and Bloomberg News

Wal-Mart senior executive Barry Friedman is confident the giant US retailer will ride out the economic storm and continue its growth in China.

The company, which has expanded massively since entering the market in 1996, now has to face battles on two fronts. The economic downturn has affected how much shoppers have to spend.

There is also increasing competition, not just from foreign rivals such as France's Carrefour and the UK's Tesco, but from local companies as well.

Wal-Mart is opening 21 stores in the first quarter of this year, taking its total in China to 147.

The number of store openings is already greater than the 19 opened for the whole of last year but not the 30 it unveiled in 2007.

Friedman, vice-president, corporate affairs, for Wal-Mart China, will not make this year's target public.

"The bunch of stores we have opened recently were in the pipeline way before the economic downturn came," he said.

He is insistent, however, that more are on the way.

"We are expanding but we don't have the numbers to give out on that," he said.

With China's growth slowing from 9 percent in 2008 to 6.8 percent in the final quarter of the year, the focus is on how this will affect consumer spending.

The Chinese government has, however, taken a number of steps to boost expenditure such as issuing coupons, not all of which have been redeemable in foreign stores.

"There have been initiatives in places like Hangzhou where the coupons which have been issued have been redeemable in our stores and which have spurred people to buy more," he said.

Friedman, who was the minister counselor for commercial affairs at the US Embassy in Beijing before joining the retailer, said Wal-Mart is keen to work alongside the government, wherever possible.

"We have been offering a lot of opportunities for consumers to take advantage of government programs and at the same time get some great prices on products," he said.

"Some of the policies the government has implemented, we are watching closely such as the policy to help rural residents and farmers buy electrical appliances and electronics."

China is still a place of intense competition. Tesco, which had previously been successful in Thailand, came to China in 2004 and now has 62 stores. Carrefour, which opened 22 stores last year, taking its tally to 130, is planning to add another 28 this year.

Friedman, a native New Yorker who speaks Chinese and Japanese, is confident of beating the opposition on price.

"The first thing is price. Our prices are cheaper across the board. There may be individual promotions but every day low prices has been our mantra since we were created 60 years ago," he said.

Tesco, in particular, has attracted local attention by trying to recreate traditional Chinese wet markets in its stores.

Friedman said Wal-Mart is not about to directly copy that approach and wants to position the US retailer slightly away from the traditional offerings of a local market.

"Well, you know, if someone is going to shop at a wet market, they are going to shop at a wet market. I am not going to compete with that and recreate a wet market. We have a greater variety of offerings than a wet market," he said.

He maintained Wal-Mart has still adapted to meet the needs of local consumers.

"One of the great thrills I have is to bring Wal-Mart executives from other countries to our stores here. They see a mix of fresh and prepared food that we would never offer in the United States," he said.

"We still have greeters here as we do in the United States. I think that works anywhere in the world."

China's consumption is still set to grow despite the downturn, particularly in outlying rural areas.

Friedman said part of Wal-Mart's focus for expansion will be in China's remoter cities.

"The second and third-tier cities are new great markets and as the infrastructure develops, leading to a greater concentration of people moving there, this will be even more so. Better communications and transport mean we will be able to get our products there also."

He said he believes opening in these areas brings great benefits to the local community, particularly in creating jobs.

"When we open a store, we buy locally for that store, both farm and locally-made products. I think we are a good partner, " he said.

He said expansion in China's hinterland will not come at the expense of its major urban centers.

"I don't put down the first-tier cities. They are great markets and there is still some major growth there," he said.

Friedman combines his time at Wal-Mart with being a governor and member of AmCham-China, the American Chamber of Commerce in Beijing, which has 1,200 company and 2,700 individual members.

"Being a member of AmCham enables you to get better access and raise issues with the key decision-makers in China that it would not be possible to do as an individual company," he said.

"The chamber is often the first place that senior decision-makers go to get a reaction, feedback or ask for input from our side. It provides a platform for everyone to express opinions," he said.

Compared to some foreign multinationals, Wal-Mart was a relatively latecomer to China, although it was only a year behind Carrefour, which entered in 1995. China, however, is now one of the company's biggest overseas territories.

"We still have a lot of growth potential in the United States. I don't think a lot of people understand just how big a market the United States really is," he said.

"We came later than some other entrants to China but we have certainly caught up, both with name recognition and location coverage," he said.

(China Daily 03/23/2009 page7)