Wal-Mart Stores: Every Day Low Prices in China

11767 Words Jun 8th, 2013 48 Pages
HKU590

ALI FARHOOMAND

WAL-MART STORES: “EVERY DAY LOW PRICES” IN CHINA
China “is the one place in the world where you could replicate Wal-Mart’s success in the U.S.”
- David Glass, former CEO of Wal-Mart Stores1

The beginning of spring 2005 must have left a mark on the corporate strategy of every retailer vying for a share in China, the world’s most populous consumer market. From this time on, foreign retailers were no longer constrained to specified regions, forced to enter into joint ventures with local partners, or hampered by a lack of distribution rights—China’s retail market had thawed and was laid open to all. To the world’s largest retailer, Wal-Mart Stores, China had long been a strategic imperative. On one hand, nearly
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But most
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Gilman, H., “The Most Underrated CEO Ever”, Fortune, April 5th 2004.

Hong Iris Wang prepared this case under the supervision of Dr. Ali Farhoomand for class discussion. This case is not intended to show effective or ineffective handling of decision or business processes. © 2006 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be reproduced or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise (including the internet)—without the permission of The University of Hong Kong. Ref. 06/297C

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Walmart Stores: Every Day Low Prices in China

importantly, whereas Carrefour had started generating positive returns from its stores in China, the annual numbers sent back by Wal-Mart China to its home office in Arkansas, US remained in the red. The fate of successfully duplicating its domestic business model in other parts of the world was further shadowed by the company’s complete retreat from Germany in 2006 due to its failure to generate any profit after struggling bitterly for nearly a decade.

The Wal-Mart Way
From Backwater Retailer to the World’s Number One The first Wal-Mart store was opened on July 2nd 1962 in Rogers, Arkansas by Sam Walton,2 a 44-year-old man from Oklahoma. Walton believed that the future of retailing lay in discounting. To avoid head-on competition with giants such as Sears and Woolworths which