Wal-Mart tight-lipped on closure reports

Updated: 2012-11-27 07:49

By Wang Zhuoqiong (China Daily)

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As Wal-Mart Stores Inc expanded its internal bribery probe to developing markets including China, the world's largest retailer refused to comment on recent reports that the company will close 100 stores that are not making money.

Wal-Mart tight-lipped on closure reports

Wal-Mart began a global internal bribery probe in March 2011, in a number of markets including Brazil, China and India, in addition to the ongoing investigation in Mexico, according to Wal-Mart China's public relations office.

The retailer said it would be inappropriate to comment on the specific allegations until the investigations are completed.

Wal-Mart said that there is no correlation between the slowdown in the development strategy in the Chinese market and the extension of the internal probe in developing markets beyond the company's Mexican unit to Brazil, China and India.

Wal-Mart said last year said that the US Justice Department and Securities and Exchange Commission were investigating whether Wal-Mart's Mexican division bribed officials to ensure market dominance.

The company has spent more than $35 million on its global anti-corruption review efforts over the past 18 months.

Last month, Wal-Mart CEO Mike Duke said in Beijing in an interview with China Daily that although the company is slowing its expansion pace, it plans to open more than 100 additional stores and more distribution centers in China in the next three years.

The less-ambitious plan is a preemptive adjustment based on the changing macroeconomic climate, Wal-Mart China said.

In October, the company downsized the number of its merchandizing offices to eight to upgrade its supply chain and operational efficiency.

China's retail sector witnessed declining growth this year because of weak consumption, saturated regional markets - particularly in first- and second-tier cities - and the rising costs of labor and rent, Guo Geping, director of the China Chain Store & Franchise Association, said earlier this month.

Wal-Mart China's newly appointed CEO, Greg Foran, said earlier that Wal-Mart is embarking on a transformation process of its China operations to create a simpler business that is more effective and to grow with a focus on business fundamentals.

Wal-Mart declined to comment on local media reports that the company is expected to gradually close 100 unprofitable stores between 2013 and 2015.

With 370 stores as of March, Wal-Mart's sales in 2011 ranked fourth in China among the top 100 foreign-chain retailers, according to the China Chain Store & Franchise Association.

The retail giant temporarily closed 13 stores in Chongqing last year over a pork-labeling probe.

Compliance with the law in developing economies is crucial for foreign retailers, which are supposed to have higher management levels than their local rivals, said Zhao Ping, deputy director of the consumption and economic research department of the Chinese Academy of International Trade and Economic Cooperation.


(China Daily 11/27/2012 page14)