Walmart In China 1

Walmart is the worlds largest retailer store that provides customers with thousands of
types of fresh foods, clothes, household appliances, grocery and offers a one stop experience for
customers. Walmart began as a single small discount store with the simple idea of selling more
for less and over the years it has grown to be one of the largest retailer in the world. Over the
years, Walmart has endeavored to create more sustainable opportunities and to bring value to
customers and communities around the world. Walmart history is traced back to 1962 where
Sam Walton opened the first Walmart store in Rogers, Arkansas and ever since it has focused on
helping customers and communities save money and live better (Spicer, 2012)
Nevertheless, Walmart has experienced bountiful problems especially in entering the
Chinese market. For over 18 years of operation in China, Walmart has only managed to open just
four hundred and five stores. Walmart operates in 117 cities and 25 provinces in China.
Although Walmart has experienced admirable growth and success in other countries like Mexico
and Brazil, it has failed to make significant growth in the worlds second largest economy.
Studies have indicated that Walmart has failed to gain significant momentum in China majorly
because it has failed to meet the tastes and preferences of Chinese consumers (Dunne, 2013). In
China, it has been noted for years that consumers buying decision is influenced or rather
inclined towards tailor-made products as well as shopping environments that reflect the countrys
customs, tastes and preferences.
Walmart entered the Chinese market in 1996 in a bid to take advantage and overtake the
existing retailers who had already incorporated the concepts and strategies that Walmart was
using. Sam Walmarts dream was to invest and enter the market of the second largest economy
in the world. However, Walmarts inability to reverberate with the local market and meet the
consumers tastes and preferences has derailed its efforts to advance its infiltration in the Chinese
market. In the business world, failure to meet the tastes, choices and preferences of consumers
possess bountiful challenges to the business (Donaldson, 2013). The retail shops that are
flourishing in the Chinese economy are those that have taken time to understand the consumers
behavior. Surprisingly, research indicated that Walmart China contributes only 2% to overall
Walmarts revenues.
Walmarts most engraving challenge is that as much as it has incorporated its strategy of
everyday low prices (EDLP) which has proven to be successful in other countries, it has failed
meet the Chinese consumers tastes and preferences that is driven by authenticity, legitimacy and
quality of products. Walmarts native competitor, Sun-Art retailer has been noted to perform
better in the Chinese market majorly because it has endeavored to understand the consumers
tastes, wants and preferences. Failure to provide the Chinese street look and Chinese super
market product displays has proven to be unattractive to the Chinese consumers. Sun-Art has
adopted local Chinese strategies in its stores therefore attracting more consumers. Incorporating
Chinese localized strategies in Walmart would overwhelmingly attract more customers and boost
the growth of the company (ZHAO, 2007).
China has been on the forefront in advising local and international investors in their
country to pay attention and focus on workers, consumers, communities, environment as well as
other stakeholders to enhance the growth of their operations. Walmart should ensure that it
Walmart In China 2

abides by the market orientation of the Chinese market instead of its United States standards of
operation. It has been noted that some strategies being used by Walmart are scaring away local
suppliers and this makes it even harder for Walmart to thrive in the Chinese market (Chan,
2011). The information systems being used in China are way too behind the United States
standards and this is making it difficult to achieve the levels of Walmarts request because of
lack of appropriate information processing capabilities. The culture of Walmart that is copied
from the United States does not fit in China and this creates a conflict with the Chinese society,
culture and practices. Walmart China should ensure that it business operations are in line with
the Chinese society, culture and practices. Walmart uses the United States suburb sitting strategy
that does not match the consumers spending habits. Walmart should drop its suburb sitting
strategy and adopt the Chinese consumers habits (Cao, 2013).
Unlike in the United States where people prepare list of goods to buy from retail stores,
Chinese consumers prefer or rather regard shopping as a leisure activity or a way of passing time
and therefore they do not have any direct list of products to buy in retail stores. In the United
States, most people live in the suburbs and they are forced to drive to retail stores to buy
products whereas in China, retail stores are near peoples residences and this makes it easier and
convenient for Chinese consumers to buy products from retail stores when they go out of the
house for a walk (Chan, 2011). Walmart should incorporate this strategy in China to ensure that
convenience to Chinese consumers. Chinese prefer large-scale promotional activities and they
are often more than willing to do price comparisons. Walmart should adopt this strategy to boost
their sales as well enhance their growth.
Although China has been indicated to have the second largest economy in the world,
recent studies have indicated that the economy has been noted to slow down as from 2012. The
Gross Domestic Product growth rate has fallen from the historical average of 9.3% to an average
of 7.7%. Per reports from the World Bank, it is estimated that the economy might drop even
further. Walmart and other businesses have been directly affected by the sudden drop in the GDP
growth rate (Kamboj, 2011). The sales as well as the growth of Walmart is being affected by the
economic problems being witnessed in China. However, the government of China has promised
that it will ensure that the economy rises even higher over the next few years. Consequently, this
will boost the performance of Walmart retailers (Ngai, 2012).
Chinas population which is estimated to be more than 1.3 billion provides fertile grounds
for businesses to thrive. The initial target of Walmart was to reap advantages from the vast
market share of consumers but a few challenges have derailed the growth of the Walmart. The
economic structures like institutions and infrastructures have been indicated to lag behind as
compared to the West. Chinas infrastructures cannot accommodate Walmarts strengths and this
presents the company with so many challenges (Chuang, 2011). The lack of sophisticated
technology and dwindling physical infrastructure possess serious threats and derails the
substantial growth of Walmart. The culture of Chinese consumers is different from that in the
West and this makes it almost impossible for Western companies to appeal to the Chinese
consumer tastes and preferences. Consequently, this troubles the growth of Walmart because it
incorporates Western strategies that are contrary to the Chinese culture.
Walmart In China 3

Walmart and other companies have indicated that it is hard and demanding to
circumnavigate through Chinas complex web of both local organizations and national political
organizations. There strict policies and regulations that in China that hinders easy operation of
foreign investors. As much as the country is big and its economy large, navigating through as a
business is always hard. In most cases, both local and national political organizations favor the
local businesses and companies while at the same time harassing and enacting strict measures
and policies against foreign investors and businesses. Consequently, businesses owned by
Chinese citizens thrive more and faster than the foreign businesses (Pringle, 2013). Walmart is
no exception, some measures and policies in the Chinese business market have contributed to its
slow and sluggish growth. At a certain point, Walmart was heavily fined by the Chinese
government with claims that it had violated both local and national laws. The government went a
step further and even ordered for temporary closure of Walmart stores. Walmart paid the fines
and claimed that the accusations were unfounded and illegitimate.
In order for Walmart to make better growth and expansion decisions, it should take both
time and a more sophisticated understanding of economic, political and cultural environments of
the countries and regions in which they intend to operate. Subsequently, they should appreciate
the differences and align their strategies and models to fit in the different economic, political and
cultural environments. Walmart should ensure that it gets its employees from the local
communities near the retail stores (Xiaomin, 2007). This can aid in ensuring that the employees
incorporate familiar measures as well as strategies that can aid in making the company attract
more customers. Walmart uses a self-managed team strategy that allows its employees to make
certain vital decisions because the employees shoulders and carries the greatest mission of
Walmart of caring about customers. It has implemented a profit-sharing plan with its employees,
employee discounts, scholarships and incentives (Mun, 2012). This boosted the growth of
Walmart in a great way. Walmart should therefore consider fostering and strengthening this
particular strategy in order to aid in substantial growth and expansion (Chan, 2008). Walmart
must adapt to the changing attitudes of the Chinese workers. A 2004 study highlighted that
Chinese workers had lower engagement and morale than prior. Team members must be
challenged and invested in. Workers need to be developed to ensure an adequate pipeline of
leaders (Burkholder, 2006).
Recent studies have indicated that Walmart is changing China and has made significant
progress. Walmart has continued to bring healthier and more affordable food and other products
to China therefore allowing customers to save more and live better. Walmart has endeavored to
make the company a workplace of opportunities and in this regard, it has created thousands of
job opportunities for people in China (LeBaron, 2014). Walmart has contributed to growth of the
Chinese economy by making other retailers and suppliers in the country to offer cheap and
quality products to the Chinese community. Walmarts spirit of hard work, enterprise, fair
dealing and integrity has infiltrated the Chinese business market therefore fostering better
business practices for local and foreign investors in China (BreaSols, 2015).
Walmart In China 4

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