Monday, October 17, 2011

Wal-Mart cannot win on prices in China - Shaun Rein

Shaun Rein
Low prices might be Wal-Mart's key marketing tool in the US, in China you lose as a foreign company from domestic competition if you try to beat them on prices, tells business analyst Shaun Rein in Reuters.

After entering China in 1996, Wal-Mart's expansion gathered steam in 2007 when it bought a 35 percent stake in Taiwanese hypermarket chain Trust-Mart. It has 353 stores in the mainland. 
Wal-Mart's market share in hypermarkets was 11.2 percent in 2010, in second place after China's Sun Art, but spending for the expansion has weighed on its profitability. 
Wal-Mart's problem is that it is trying to compete with domestic chains on price, said Shaun Rein, managing director at Shanghai-based China Market Research Group. 
"If your strategy is 'cheaper than Chinese companies', you are never going to win the market," Rein said. 
"But that is what Wal-Mart is trying to do. The strategy is all wrong since the very beginning, and that is why it has never been profitable here."
More in Reuters

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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