Wal-Mart Plans To Double Stores in China Over Five Years

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 growing personal wealth of the country's 1.3 billion people. The expansion will help the Bentonville, Ark.-based company broaden its reach beyond its current 84 stores across 46 Chinese cities into smaller cities, where competition is less fierce. Wal-Mart expects the growth to help it garner 20% of China's retail market, the vice president of its China operations, Terrence Cullen, said.

"The Chinese market is huge," Mr. Cullen said in an interview yesterday in Singapore. "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." 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% last year and the country's retail sales increased 14%.

"Retail demand is growing," the chief economist at Bank of East Asia Ltd., Paul Tang, said. "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 has opened 12 stores in mainland China so far this year, on track to beat 2006 openings of 15, the company said. The retailer sped up its expansion earlier this year by acquiring a 35% stake in China's Trust-Mart. Wal-Mart said at the time that the move may lead to its taking ownership control of Trust-Mart's more than 100 hypermarkets.

Mr. Cullen denied a report in the Britain's Daily Telegraph that Wal-Mart is buying all or part of Beijing Hualian Hypermarket Co. to expand in China. The newspaper said Wal-Mart had asked Credit Suisse Group to manage the planned bid.

"There are lots of rumors, but I can tell you we are not buying them," he said. "There are many possible targets we are looking at, but we don't have anything at the moment."

Hualian spokeswoman Li Yiping also denied the report.

Overseas expansion has become key for the retailer as its growth in America slows.

"The quickest way to do it is to buy into local retailers — it all depends on what price they have to pay for it," a Hong Kong-based analyst who covers retailers at South China Finance & Management Co, Anthony Teoh, said. "When you're looking at the valuations in the retail sector, foreigners have to pay pretty steep prices."