Agenda

 Key events of Walmart in China - Eder Urban

 SWOT & PEST - Andres Ferreira
 Competitive Landscape - Huyen Do
 Key Issues - Vipul Kapadia
 Recommendations - Vipul Kapadia
 Learning from the case - Liseth Tovar
 Walmart Today (in China) - Huyen Do
An Interesting Case!

World’s Largest Retail Company + World’s Most Populated Country

When in Rome, do as the romans do

Walmart we
know

Walmart we
don’t know
THE RETAIL INDUSTRY
• 2010 China, emerging as the second largest consumer.
 Forecasted to surpass the U.S. in 2020 Increased
foreign
investment
• Europe was going thought a sovereign debt crisis

• In the U.S. slow growth and unemployment made

Middle
customers stop spending money Class
Growth

Second Largest
Economy

Chinese growth projections reinforced Wal-Mart’s

direction into this market.
HISTORY OF WAL-MART IN CHINA
 Wal-Mart
opened its first Middle
supercenter and Class
Sam’s Club Growth

1995 1996 2004

1996 2000

Wal-Mart joint Chinese Wal-Mart

venture with government Expansion
Shenzhen remove Plans
International restriction
Fiduciary
Investment Co. Ltd.
Wal-Mart acquired 35%
stake in Trust-Mart Wal-mart double New strategy to
Their presence grew to its presence with combine “Local
189 stores in 101 Chinese 370 stores in 140 relevance and
cities cities. global leverage”

2010 2012

2007 2012 2012

China - Second First quarter

Largest Economy. of the year 
Sales climbed
1.3 Billion people 15%
SWOT ANALYSIS
 S W
S W s W
T O T O T O

1995 2012
 SWOT ANALYSIS – TILL 1995
Wal-Mart has diversified its
products across many sectors
Wal-Mart has the international
logistics system supported by The company deals with a huge
advanced information technology. number of suppliers making its
supply chain more complicated
The operation of the promotion
Wal-Mart is considered one of the
The price advantage is obvious: largest retailers in the world, it is
Strength Weakness
The purchasing rebates are very not possible to monitor all of its
attractive operations

Despite its huge scale of operations

With its vast resources, Wal-Mart
and customer loyalty, Wal-Mart is also
has the opportunity to take over,
target of competition, locally and globally.
Threat Opportunities merge with, or form strategic
alliances with other global
The cultural differences and the national
retailers.
differences have effects to Wal-Mart’s
operations.
Many opportunities emerged for
international retailers in China, as
Intense price competition is a threat as WalMart.
the country’s middle class gained
power.
 SWOT ANALYSIS – TILL 2012
Walmart acquired a 35% stake in Trust-Mart,
allowing the brand to expand its presence
Walmart counted with its
international division as the
company’s primary growth
Engine with 125 billion USD . Strength
By this time Walmart purchased a
majority share in Yihaodian,a Chinese
e-commerce space
Walmart had low profit margins in China at
that time, which were estimated to be
between 2% and 3%.
Walmart’s main domestic competitors, combined,
had more than 8,000 stores in China and more
than 3 billion USD in sales.
Walmart’s attorneys cited China as one of five countries that
represented the highest corruption risk for the organization.
If Walmart focused too much on
cutting cost in favour of its EDLP
strategy, its revenues and profits
would suffer.
A highly competitive convenience
Weakness store market at the time deemed
the launch of SmartChoice into
failure
China announced that it planned
Threat to reduce exports and increase its
Opportunities
own consumer expending.
While the US and European
economies slumped, China
became an even more important
growth market with a number of
sales that climbed to 783.03
billion USD.
 SWOT ANALYSIS – PRESENT
Walmart’s EDLP strategy can be hard to apply as there
The largest retailer in the world, with unmatched scale of are countless merchants outside willing to go one yuan
operations and strong market power over suppliers and lower.
competitors
Walmart’s brand it’s recognizable, but so
Customers pay less at Walmart than much of it is negative.
other stores
Strength Weakness Since Walmart minimizes selling prices,
The global supply chain also provides it also needs to minimize profit margins
business resilience from and rely more on sales volume.
market-specific risks.

Aggressive competition is a threat Walmart’s opportunity to expand

because other large retailers could in developing countries is based on
Threat Opportunities their high-growth economic
use aggressive marketing and
strategies to capture some of condition.
Walmart’s customers.
Walmart’s opportunity to improve quality standards
Small-scale or individual online selling is a threat against the addresses consumers’ concerns on the health effects of
company’s retail business. using low-cost and sometimes low-quality products.
.
PEST ANALYSIS
 • Wal-Mart has been at times subjected to political action law suit.
Politics

• Walmart China realized that competition was intensifying between the physical stores,
Economic
hence it looked to expand the business into the ecommerce sector.

• The events that happened at Chongquing with the mislabelling violation issues and
Social
other 21 violations found by the Chinese Administration for Industry and Commerce.

• Wal-Mart retail uses modern technologies for the core purpose of marketing. It mostly
Technology
relies on the internet and social media for advertising and selling of its product.
COMPETITIVE LANDSCAPE
Competition Landscape Overview

Top 10 chain retailers, 2012 (Rank by retail sales)

Competition Landscape Overview (cont.)

Top 10 chain retailers, 2017 (Rank by retail sales) (Source: Statista.com)

Foreign Competition
Walmart
Entry Strategy Entering Shanghai and then 2nd
tier city, Shenzhen
Acquired Trust-mart
Carrefour
Operating in Taiwan for seven years before coming to China
Partnered with Shanghai Hualian Company

Locations Stores in rural areas or near high Stores at crossroads in the intercity business centers or
speed roads urban residential areas

Shopping Name was translated into Selected Chinese characters to represent its name (“family,
Environment Chinese characters without any happiness and luck”)
meaning Making special shelving so more brands can be displayed
Tailoring the merchandise to local market

Price “Everyday Low Price” High low pricing

Supply chain Having a central distribution Relying on local distributor
center
Tough Local Competition

Ability to weather the business downturn

Occupy favorable locations

Catch up with Western retailers

KEY ISSUES
 KEY ISSUES
• EDLP
• Huge Success Japan & UK
• Failed in Brazil
• Lower price = Lower quality?

• Bribery

Most Corrupt Least Corrupt

Nation Nation

China

Based on Transparency.org
 KEY ISSUES
• Bribery
• 2005 Case

• Chongqing Scandal
• Arrest of Walmart employees
• House arrest
• $572,000 Fine levied by Administration for Industry & Commerce
• 13 Stores closed
• Walmart China CEO resigned
• SVP HR resigned

Internal and external Implications?

 KEY ISSUES
• Local Relevance

Lets’ go fishing…………… at Walmart? Probably the only country where you can
“accidently” enter a Walmart store
 RECOMMENDATIONS ON KEY ISSUES

• Regularly conduct business intelligence to stay locally relevant

• Starbucks

• Receptive to changing trends.

• Forever 21 (2016)

• Get ISO experts and get ISO 37001 certification (anti-bribery management
systems) to gain trust

• Retain EDLP, but establish a sub-section selling only premium products.

Risks?
LEARNINGS FROM THE CASE
 LEARNINGS

Joining the union was going to be a

Monitoring process and training
tool of management
.

Learned the importance of food,

cosmetics, package size, variety and
Adapt to different culture
store location to keep the Chinese
customer buying

Walmart took measures that centred

on attracting middle class buyers and
keep its employees productive and its
supply chain sustainable
WALMART – TODAY
 WALMART CHINA - TODAY

450 420 424 424

395 400
400 385
364
350

300

250

200

150

100

50 19
6 8 10 11 12 15
0
2012 2013 2014 2015 2016 2017 2018
Retail Wholesale

Walmart International’s geographic market in China (Source: Walmart’s Annual Report, 2011- 2018)
 WALMART CHINA - TODAY

• Extensive investment on fresh goods ND eCommerce

• In 2016: sold certain assets relating to Yihaodian including the
Yihaodian brand, website and application, to JD, Chinese e-commerce
giant after Alibaba.
• In 2017: Launched Sam’s Club Global Flagship Store on JD.com in
China
• Introduced one-hour delivery from stores in China.
• In 2018: Together with JD, co-invested $500m in Chinese online
grocery delivery company called Dada-JD Daojia
Thank you!