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Multinational retailers feel the chill on expansion in China

By Hao Zhou (chinadaily.com.cn)
Updated: 2008-10-17 17:06

The US retail giant Walmart has suspended its plans to expand in Haikou, the capital of Hainan province, China Business News reported today.

"We had been expecting leading enterprises such as Walmart to invest in Haikou," said Lin Daojian, deputy head of Haikou's commercial administration. However, the long-anticipated move will be delayed because the US retailer changed its investment plan, Lin added.

In 2006, Walmart had chosen the middle section of Haixiu Road in Haikou as the location for a new store. But it is unlikely to make the investment in the near future.

"The retailer slashed its 2008 budget this June," the paper quoted Dai Chunhua, the chief consultant of Chrisdor Consulting International, as saying.

In 2007, the US retailer spent $14.9 billion opening new stores. These included 30 new stores in China, the highest number in a single year since it opened its first store in Shenzhen in 1996. The total member stores of Walmart in China reached 100 by the end of 2007, said Chen Yaochang, president of Walmart China, at the beginning of this year.

But the US retail giant has opened merely 13 stores so far in China in 2008, according to insiders from Walmart, said the paper.

Not only Walmart but also other worldwide retailers such as Carrefour and Tesco have slowed down their expansion in China.

Carrefour added 19 more new outlets in the Chinese mainland last year, bringing stores to a total of 109, and it targeted a total number to 130 this year, said Luo Guowei, president of Carrefour China. However, the French retailer opened less than 10 stores in China, including its Shanghai Shenzhuang Store, which opened for business on August 26.

The situation is similar with the world's third largest retailer Tesco. The British retail company has launched only 5 stores so far this year in China, far below its previous goal of 10 new stores per year. And Germany's largest retailer Metro has not even opened one new store in China this year.