Beijing Hualian, one of China's biggest retail groups, has denied a published report that it is in talks with hypermarket giant Wal-Mart on a possible takeover bid.

Britain's Daily Telegraph reported that Wal-Mart has asked advisers at investment bank Credit Suisse to draw up plans to buy all or part of the Beijing-based retailer.

The newspaper cited an anonymous inside source that said the two parties have held preliminary talks and both have been "looking hard" at the possible deal.

A Wal-Mart booth at an exhibition in Zhengzhou, capital of Central China's Henan Province. Sha Lang

But Beijing Hualian's spokeswoman Li Yiping fimly denied the report. "We do not have such moves (underway with Wal-Mart)," she told China Daily.

Dong Yuguo, spokesman for Wal-Mart China said corporate policy does not allow him to comment on media reports or market speculation.

One expert said it is unlikely that Wal-Mart would seek local acquisitions at this stage. "It is too early for Wal-Mart to do so in China," said Wang Yao, deputy secretary-general of China General Chamber of Commerce.

Wang said the US firm is at the phase of laying a solid foundation in China, so developing on its own is the right strategy at the moment.

Wang also noted that management models for local retailers are very different from international giants like Wal-Mart, so mergers and acquisitions carry many potential risks.

Wal-Mart announced in February that it would acquire 35 percent of Taiwanese chain operator Bounteous Company Ltd (BCL), the owner of Trust-Mart. The deal also includes an option that allows the US company to possibly become the dominant shareholder under certain conditions.

Dong told China Daily that the partnership with Trust-Mart has gone smoothly. "Trust-Mart is a very good company. We have a lot to learn from each other."

BCL operates 101 hypermarkets in 34 Chinese cities, all still under the Trust-Mart name. Wal-Mart, which entered the Chinese market in 1996, now has over 70 stores in the country that employ more than 37,000 people

Beijing Hualian is partly owned by Beijing municipal government and has some of its shares listed in Shanghai. Analysts estimate the firm's value exceeds $1 billion.

The local company recently formed a 50-50 joint venture with Taiwan-based Shin Kong Mitsukoshi to open the luxury department store Shin Kong Place in Beijing's central business district.

(China Daily 07/21/2007 page10)