Most Americans already know that Wal-Mart is addicted to Chinese take out. The giant retailer imports more Chinese products than anyone in American history. “China Mart”, as we call the company, has significantly helped explode our trade deficit with China. But lesser known is the fact that Wal-Mart sees China as an incredible market for retail stores, and the company’s international division is wasting no time in exploiting the country’s willingness to embrace American stores. Wal-Mart even recently agreed to allow its Chinese stores already built to be unionized. This week Wal-Mart proudly announced that it is partnering with a Hong Kong-based company called CITIC Pacific to open “hundreds of new stores” in China over the next half decade. Wal-Mart publicy stated that the new partnership might produce around a dozen new stores in 2005. The new stores will be located in Shanghai and the eastern provinces of Zhejiang and Jiangsu. Wal-Mart will own a 65% share in the joint venture. Wal-Mart has had stores in China for nine years now, and has at least 43 stores there already. CITIC Pacific is a large corporate entity itself, owning Sims Trading Co, a food distributor, an airline, power plants, and other various real estate holdings.
China represents an enormous treasure trove for Wal-Mart, not just in the cheap labor and products it can extract from the company, but for the millions of low-income people it can sell to. The China retail market is estimated at $240 billion, according to the Associated Press. That means Wal-Mart today, with more than $253 billion in annual sales, sells more products than the entire retail market in the world’s most populous nation. When China joined the World Trade Organization, it agreed to drop restrictions on foreign companies coming to its shores. Other foreign stores from Germany, France and England are also racing with Wal-Mart for the China prize, and the Chinese themselves have formed a company by the name of Wumart, which owns 430 supermarkets and convenience stores mostly in and around Beijing. As in most countries, Wal-Mart’s international expansion is done with a local partner, such as CITIC. This has been their pattern in Mexico, and other joint ventures. In November, 20% of Wal-Mart sales came from its international division. It’s easier to build stores in China. There are no citizen’s groups slow you down. For earlier stories on this topic, search by “China.”