Walmart keeps on expansion path in China and India

Walmart says that Hong Kong's market is too competitive and it is instead focused on expanding store…

Walmart says that Hong Kong's market is too competitive and it is instead focused on expanding stores and streamlining supply chains on the mainland and in India. "We enter a market because we believe that we're able to add value to the customer and make a difference through scale," Walmart Asia chief executive Scott Price said in Hong Kong yesterday, adding that "given the maturity and the duopoly that exists in Hong Kong", opening stores in the city did not interest the US-based firm.

The focus will be on western China and second- and third-tier cities where the company sees opportunities to leverage its global sourcing and distribution network to compete against less resourceful regional players. Walmart is the third-largest supermarket chain on the mainland with a market share of 5.8 per cent and US$9.2 billion in revenue last year, according to China Market Research Group (CMRG). The firm has more than 11,000 outlets worldwide, including 20 in India where, because of prohibitions on foreign-owned supermarkets, it focuses on selling wholesale goods to retailers.

Central to this is a joined-up logistics network. He said that unlike its competitors, Walmart supplied most of its stores through a chain of 14 distribution centres, each responsible for keeping shelves stocked and screening products for deficiencies such as food-related health hazards.

Total logistics costs on the mainland topped 9.4 trillion yuan (HK$12 trillion) last year, equivalent to 18 per cent of gross domestic product, China Federation of Logistics and Purchasing data shows, with road tolls and trucking penalties accounting for a third of those costs.

The new battleground is e-commerce and same-day home delivery. CMRG's Benjamin Cavender said Walmart would need to invest smartly to get the logistics right and maintain margin.