Wal-Mart to close 20 stores in China, but optimistic of future in People's Republic
Turns out Wal-Mart's plan to expand heavily into China isn't going as easily as it would like.
Bloomberg reports that the U.S. retailer is "restructuring" part of its business in China by changing management style and closing nearly 20 stores within the next year. However, Wal-Mart is retooling and will open other stores in areas they think they'll succeed in.
Wal-Mart stores on the mainland resemble those in North America - with aisles and aisles of toiletries, toys, gifts and stacks of fresh local produce. However, the store has several rivals including China Resources Enterprise Ltd.
In a conference call on Oct. 15, Bloomberg reports Scott Price, Wal-Mart's Asia chief said the 20 stores to close represents 2.5 percent of its total sales volume in the People's Republic.
The Chinese economy is not growing as quickly as it did in previous years but in the third quarter, the economy grew 7.8 per cent thanks to greater foreign and domestic demand for factory made goods, according to The Guardian.
Despite the store closures, Wal-Mart is optimistic about it's future prospects in China.
"I see a lot of angst, for whatever the reason, around China's reduction in its GDP forecast. I think most economies in the world would kill for China's reduced number. Let alone its absolute growth. We see China as a very important market and we're very optimistic about it," Price told the Economic Times of India.
Wal-Mart is not the only western firm trying to break into the lucrative Chinese market. Sweden's Ikea has successfully expanded into major Chinese cities and the company should have 40 stores in China by 2020
Tanya Talaga is the Star's global economics reporter. Follow her on Twitter @tanyatalaga