Wal-Mart Closed More Than 80 Retail Stores Across China Due to Extremely Difficult Business Environment

Translator: Yue Ying Wan Chuan 
Proofreader: Janyvo

In 1996, Wal-Mart, a Fortune 500 giant, opened its first store in mainland China on the edge of Hong Lake in Luohu District, Shenzhen. The bus stop in front of the store is called “Honghu Wal-Mart” station. Whilst the bus stop sign still stands today, sadly, the once-popular Wal-Mart flagship store will no longer be. Looking at the sign, but without the store in sight, it is heart-wrenching for all.

Back at that time, the only supermarkets that could be called foreign-owned in mainland China were Metro, Carrefour, and Wal-Mart. Today, Metro has been acquired by Wumart, Carrefour has been acquired by Suning, and only Wal-Mart is still holding up well.  Nonetheless, the good times did not last too long. In recent years, Wal-Mart has been stepping up in closing its stores.

According to an unofficial report, as of June 31, 2021, only in the first half of the year, Wal-Mart in the mainland has closed 11 stores, and Wal-Mart has closed more than 80 stores in total over the last 6 years in China.

The table below illustrates the number of stores closed by Wal-Markt in recent years (up until June 2021, based on unofficial data available)

Number of Stores Closed by Wal-Mart In ChinaYEAR
13 Stores2016
24 Stores2017
21 Stores2018
15 Stores2019
10 Stores2020
11 Stores2021

The reality is that since 2016, the business outlook for the foreign-owned supermarkets in the domestic market has been deteriorating fast, and foreign investors have been trying to sell their stakes in China. The increasing pressure aggregated from e-commerce, new retail models, and excessive-high rents, has led to Walmart’s high store closure rate and withdrawal from the regional retail market.

Surely, to meet the changes in China’s consumer market, Wal-Mart had also implemented many business strategies, especially in the area of e-commerce where repeated attempts were made. In 2011, Wal-Mart insightfully acquired 17.7% of No. 1 Store from Ping An to launch their first e-commerce initiative, and in 2015, Wal-Mart acquired the entire ownership of No.1 Store. But, overall this investment turned out bad move, the business did not perform as well as expected.

By 2016, merely a year later, Wal-Mart decided to give up on “building up its own e-commerce platform in China” strategy. Instead, Wal-Mart made a share-swap with Jingdong over its ownership in No.1 Store, an investment that had been nothing but capital intense and fruitless for Wal-Mart. From then onwards, Wal-Mart started a new e-commerce partnership business model with Jingdong and Tencent.

Source: 中共国营商环境恶劣,沃尔玛关店80多家 – GNEWS

Published by: Lish

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