Walmart in China

Editor's Notes

1. *Rapid industrialization + growing consumer markets → new opportunities for FDI -Why China is attractive: Large middle class market “It boggles the mind to think if everybody washed their hair every day, how much shampoo you would sell [in China].” Entry into WTO (2001) and economic movement -Superstores are really growing in China Faced problems early on Pricesmart Recently, getting a better handle on the market and its needs -Walmart currently has over 400 stores in 130 Chinese cities Revenues and profits are growing rapidly
2. -Walmart has always had a strong relationship with China >20,000 Chinese suppliers Provided Walmart with 70% of the nearly $420 billion worth of goods annually -Walmart opened its first official store in China in 1996 -Current sales in China > $7.5 billion Seems low Still trying to understand the market
3. -Products Regional differences 95% of what Walmart sells in China is sourced locally “It has to smell like fresh blood.” - Lina Wang (Chinese consumer) -Cultural elements Social status Quantity Quality “There is a huge level of distrust in this market.” Main values
4. 1) E-commerce in 2016 Walmart is switching strategies Economic climate JD.com -2) Food offerings Grocery market expected to grow to $1.5 trillion by 2020 Walmart built 11 centers for fresh food
5. Video if time - runs 2:55 https://www.youtube.com/watch?v=6OGuZTko8N0
6. On July 2, 1962, Sam Walton opened the first Walmart store in Rogers, Ark Period of readjustment- Foreign-trade procedures were greatly eased. A wide range of cooperation, trading and credit arrangements with foreign firms were legalized so that China could enter the mainstream of international trade. Since 1978, when it first opened its economy to foreign direct investment, China’s GDP has grown at a compounded rate of 9.9% Walmart expanded to China in ‘96 , it was the second foreign supermarket chain to open in China The following year the company celebrated its first $100 bilion sales year China’s economy has averaged an impressive 11.7%2 growth rate since it joined the World Trade Organization (WTO) in 2001. 2010, Wal-Mart opened 47 new stores and Carrefour added 30 2013 was a difficult year for foreign supermarket chains in China. British retail chain Tesco closed four stores in August, while French supermarket chain Carrefour shut down two, and walmart shut down 5. Domestic operators were better able to weather the downturn because they enjoyed supportive measures from local governments In 2015 Walmart acquires 100% stake in Yihaodian, an e-commerce business in China, up from the 51% stake since 2012. Earlier this year, Walmart sold Yihaodian to JD.com, one of two huge Chinese e-commerce sites. They recieved stock during the sale, but continued to purchase more stock in the company just this past month.
7. Always start with research Originally gave free reign to managers to order from local suppliers Backfired when there ended up being fox meat in the donkey meat (a delicacy in China) Wal-Mart slashed nearly two-thirds of its 20,000 suppliers, including food. Now, Wal-Mart knows exactly where each product comes from. Wal-Mart also took back some of the responsibilities from local managers, though they are allowed to decide on such issues as whether meat should be loose or packaged in their stores.
8. After researching the market, marketers can begin to understand the regional differences and localize to those individual tastes Choose products that are delicacies in the specific regions. Then source the products locally to ensure they are both fresh and high quality
9. They sold locally produced items - country-of-origin effect Walmart’s decision to enter into a strategic international alliance with JD.com
10. Walmart has yet to capture the Chinese market because with the largest population in the world it should be the leading revenue producer for China however; it has a strong revenue but has way more potential Need to Adapt their Marketing strategies to each individual region instead of one country Advertise and Marketing must focus on Freshness Quality instead of quantity Move Walmart away from the low price category instead move it toward the Local Quality Supermarket where they can access everything they need
11. Walmart needs to capture the market by hiring managers and marketers from the local region of the country because each region of China differs drastically Needs to develop a centralized distributing channels for its locally sourced food Quality instead of quantity Freshness is the key to Chinese Market Accessibility to produce from around the world One of the biggest problem with Walmart is the Middleman Needs to cut out the middleman and become direct distributors of product