What is it about China that's driving away top US officials? No sooner does US ambassador Jon Huntsman beat feet for the US and a presidential bid, then Wal-Mart VP of Operations in China Shawn Gray resigns -- completing a trifecta of ex-Wal-Mart executives from China which includes CFO Roland Lawrence and COO Rob Cissell. Maybe there's something in the water.
Or maybe it has something to do with declining fortunes. China Market Research Group estimated the company's market share dropped from 8% to 5.5% over the last three years as e-commerce, rising real estate and labor costs, and evolving consumer preferences bedevil their strategy. Wal-Mart figured big box retailing would take off in China as it did in the US, the same mistake Home Depot and Best Buy made -- and they exited.
One big boo-boo: no free parking. Chinese shoppers are like US shoppers. They hate to pay for parking and Wal-Mart apparently doesn't offer validation. A second no-no China Market Research noted: even Wal-Mart has trouble competing on low prices against cutthroat mom-and-pop stores where the owner and family live comfortably on $300 per month.
In a Wall Street Journal interview, Wal-Mart President and CEO Mike Duke shrugged off any problems in the China unit, noting that growth takes time. Wal-Mart operates 333 stores in China with revenues of $7.5 billion. The company announced plans to build a headquarters in Shanghai to oversee online operations in China. Forrester Research estimated that e-commerce sales in China will reach $159.4 billion by 2015, up from $48.8 billion in 2010.
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