Wal-Mart poised for major China expansion http://today.reuters.com/investing/FinanceArticle.aspx?type=businessNews&storyID=2006-03-19T102450Z_01_N19209142_RTRUKOC_0_US-RETAIL-CHINA-WALMART.xml&src=cms
Sun Mar 19, 2006
By Emily Kaiser
SHENZHEN, China (Reuters) - Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) plans to hire 150,000 people in China over the next five years, five times the number it currently employs here, as it prepares for a major store expansion.
Joe Hatfield, chief executive of Wal-Mart Asia, who has worked at the world's biggest retailer for more than 30 years and was its first employee in China in 1994, said on Sunday the company plans to open 20 stores in the country this year and is racing to train more staff so that it can speed up growth.
"We're really going to ramp this up," Hatfield told Reuters in an interview while touring stores in Shenzhen, Wal-Mart's China headquarters.
The Bentonville, Arkansas-based retailer currently has 56 stores in China, putting it behind other global chains such as France's Carrefour (CARR.PA: Quote, Profile, Research), which had 78 at the end of 2005.
Wal-Mart did not even register enough sales to crack the top 30 on the Ministry of Commerce list of the biggest retailers in China, released last month.
That looks set to change.
"We're going to be growing in all directions," Hatfield said, adding that new stores were planned for both the major metropolises and the smaller cities.
Barring any major economic upheaval, Wal-Mart's China operations could be as big as its U.S. business in 20 years, Hatfield said -- something that Wall Street analysts have long predicted. Wal-Mart now has about 3,700 U.S. stores.
The United States generated 80 percent of Wal-Mart's $312 billion in sales for the latest fiscal year, but slowing growth and rising opposition at home have made international expansion all the more appealing.
America's love-hate relationship with Wal-Mart is well-documented. The retailer boasts that 100 million people shop at its U.S. stores each week, and yet its critics have grown increasingly vocal in the past year.
Two union-funded groups have set up Web sites and launched grassroots campaigns aimed at drawing attention to what they consider stingy wages and benefits for Wal-Mart workers.
Communities across the country have campaigned against new Wal-Mart stores, saying they devour green space, increase traffic congestion and drive competitors out of business. Activists have succeeded in blocking or delaying dozens.
WAL-MART UNIVERSITY?
In China, however, consumers can't seem to get enough. Stores here can draw 1.2 million people per month, and the retailer is constantly on the lookout for new locations.
The biggest challenge is finding staff.
Hatfield said he has asked Wal-Mart to set up a university degree program here to train future employees to work in jobs ranging from master baker to accountant.
The retailer employs about 30,000 people in China, and Hatfield said he will need to hire 150,000 more as the expansion picks up steam. Wal-Mart has already started putting extra staff in stores so that they can learn on the job and be ready to manage newly opened locations.
Wal-Mart got off to a slow start here. Hatfield arrived in 1994, but it was nearly two years before the retailer opened its first stores. Growth has been modest since then, but China relaxed rules for foreign retailers at the end of 2004, making it easier to expand.
Hatfield spent his first months in China visiting other retailers to get a feel for shopping habits and tastes. As a result, outlets here may look like American megastores from the outside, but they carry a wide array of local delicacies such as sliced pig's ear, live fish and even crocodile.
Hatfield, 61, said he has no desire to leave, and hopes to stick around long enough to see the day when Wal-Mart China rivals the retailer's U.S. operations. He tells co-workers he plans to work until he is 80.
And after that, he wants to be a Wal-Mart greeter, standing at the entrance to welcome shoppers.
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