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Wal-Mart’s China Expansion Strategy

Wal-Mart appears to be in talks to make a more significant entry into the Chinese marketplace through the acquisition of a Taiwanese-owned supermaket chain called Trust-Mart, according to The New York Times reports this morning.

Moving into China is pivotal to the retailer’s international strategy, as China may be the only place where the company can replicate what it’s done in the U.S. Currently, Wal-Mart has 66 stores in China and is also the largest foreign retailer in both Mexico and Canada. Yet expansion in other countries, such as Germany, Japan, and South Korea has been difficult.

Wal-Mart is up against French retailer Carrefour in its bid for Trust-Mart. Carrefour currently has more stores in China than Wal-Mart, and both retailers must compete with large Chinese retailers, like China Resources and Shanghai Brilliance Group. If Wal-Mart wins out, there will still be a need to figure out its competitive advantage and target market in the Chinese marketplace — suburban .vs urban. (As an aside, experts from Wharton and Boston Consulting Group have released a report that offers insights on how Chinese consumers are evolving as the market develops.)

A notable play in Wal-Mart’s expansion in China is the formation of trade unions by the retailer’s employees there, while resistance to such employee activities continues to be a practice for the company in the U.S.

LDJ