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Wal-Mart to Open 110 More Stores in China

$100 million expansion will bring 19,000 jobs to world's second-largest economy

China - Wal-Mart, the world's largest retailer, has announced plans to accelerate its expansion into China by adding as many as 110 stores over the next three years, resulting in an almost $100 million investment.

The Bentonville, Arkansas-based firm wants to open the new stores in the world's second-largest economy at the same time as closing 30 under-performing outlets over the next 18 months.

China is key to Wal-Mart's international ambitions but it has stumbled in a market where consumers value safe and authentic food over the low prices for which the retailer is known.

The U.S. retailer, which operates about 400 units in China, said last October that it would open up to 110 facilities in the country between 2014 and 2016 and was looking to close 15-30 others over the next 18 months as part of a rationalization process in the country.

Its local rival, Sun Art Retail Group Ltd, said in March it would continue to maintain steady new store expansion after China's top hypermarket operator posted a 15.2 percent rise in 2013 net profit with an expanding store network helping it shrug off an economic slowdown.

'China presents one of the biggest opportunities for us around the world to grow our stores and clubs, so its really important,' Doug McMillon, president of Wal-Mart's international business, said today in an interview with Bloomberg Television.

Wal-Mart already has 400 outlets across China and Wal-Mart is looking to develop a larger presence in the country's largest center's while building bigger stores in third- and fourth-tier cities.

Wal-Mart's competition in China also comes from local independent traders and Shaun Rein, Shanghai-based managing director at China Market Research Group said, 'They haven't been as quick to react to competition and local players are able to cater to customers' preferences faster than Wal-Mart.'
Sun Art is China's largest hypermarket operator, with a 14 percent share of the 574 $94 billion industry last year, while Wal-Mart is joint second along with China Resources with 11 percent market-share.

Wal-Mart plans to ramp up expansion in smaller cities outside Beijing and Shanghai. The company is also investing in distribution and will add a new center in the Northeastern city of Shenyang next month.

'We have super centers and we have Sam's Club; we'll be investing in both formats, as well as in distribution areas to help us improve in areas such as fresh food,' said McMillon to Bloomberg Television.

The company expects to add about 19,000 jobs in China over the next three years.
Author: James Nye