Wal-Mart may have to fight to keep market share in China after having to close 13 stores in the city of Chongqing over mislabeling of pork as organic
October 27, 2011
– Wal-Mart Stores Inc. faces challenges to maintaining market share after having to close 13 stores in the city of Chongqing, China over the mislabeling of pork as organic, Bloomberg reported Oct. 24.
Wal-Mart will have to work hard to retain its share of China’s retail market, where the competition is steep and includes Sun Art Retail Group in the No. 1 spot, as well as Carrefour SA and Tesco Plc. Last year, Sun Art held 11.9% of the Chinese market, which could reach 911 billion yuan (US$143 billion) by 2015 from about half that in 2010, according to Euromonitor International.
In contrast to the U.S., where Wal-Mart has 80% market share among ten major competitors, China has no fewer than 32 hypermarket operators. Wal-Mart has been in China since 1996 and currently operates around 350 stores. The company’s market share rose from 4.8% to 11.2% since 2005, the publication stated.
Although Wal-Mart has not detailed specific improvements to its Chongqing’s stores, an official with the local Bureau of Inspection and Enforcement said Wal-Mart would feature food safety labs on the stores’ premises.
Since 2006, the Chongqing stores have been cited over 20 times for violations, such as selling expired fowl. After the latest violations, some analysts expect Wal-Mart’s market share to drop, as fewer consumers are willing to pay premium Wal-Mart prices.
Wal-Mart China’s president of operations, Ed Chan, left his post following the store closures and has been replaced by Asia CEO Scott Price.
The primary source of this article is Bloomberg, New York, New York, on Oct. 24, 2011.