US-based retailing giant Wal-Mart's business expansion in China has entered a new phase, as the company's first Beijing store opened last Friday.

"The opening of the Beijing store is the prelude to Wal-Mart's further expansion in northern China," said Wang Yao, director of the Industry Department of the China General Chamber of Commerce in a telephone interview.

Though Wal-Mart entered China in 1996, most of its China-based stores are located in South China, mainly in Guangdong Province, and the brand has been absent from major Chinese cities including Beijing, Shanghai and Chongqing.

Wal-Mart has its own business strategy in China, according to Huang Hai, director of the Bureau of Trade and Markets of the Ministry of Commerce.

Instead of marching towards those major cities in East and North China, Wal-Mart started from more developed, medium-sized coastal cities in South China such as Shenzhen, Guangdong Province and Fuzhou in Fujian Province.

After the brand was well-established in South China, Wal-Mart, with rich experience in China business and well-trained management personnel, is ready for expansion into other regions of the vast China market, explained Huang.

Beijing, the capital city of China, naturally has been given first priority in Wal-Mart's expansion outside the nation's southern provinces. Wal-Mart is planning four more stores this year in Beijing, he said.

This is similar to Wal-Mart's domestic strategy in the United States, where it first started from towns and turned later to big cities, Huang added.

Wal-Mart China officials were unavailable for comment.

The world's leading retailer had 26 stores in China by the end of February this year, according to China General Chamber of Commerce statistics.

The Beijing store is the giant's second store it has opened in China since March, following the one opened last month in Changsha, in Central China's Hunan Province.

"Wal-Mart's stores in China are expected to reach 44 by the end of this year," said Wang.

Besides Beijing and Changsha, cities where Wal-Mart will open new stores include Tianjin, Changchun in Northeast China's Jilin Province, Shenyang in Northeast China's Liaoning Province, Shanghai, Guangzhou in South China's Guangdong Province, and Haikou in South China's Hainan Province, he said.

Wang told China Business Weekly that Wal-Mart has planned another 50 new stores within three to five years, and the total number of stores in China will amount to nearly 100, which is similar to its competitor firm, France-based retail giant Carrefour.

According to its commitment to the World Trade Organization (WTO), China will fully open its retail sector to foreign investment before January 1, 2005.

Currently, there are restrictions on the location and number of stores opened by foreign retailers. In addition, foreign investors are not allowed to take a controlling stake in Sino-foreign joint venture retail stores.

The planned business expansion in China reflects Wal-Mart's changing global strategy, said Wang.

Wal-Mart's senior officials announced recently that it is preparing for business expansion outside the United States, as the overseas business has increased more rapidly than its US business.

The company's business volume in the United States reached US$11.79 billion, up 9 per cent year-on-year, while its overseas business grew 17 per cent, attaining US$3.5 billion in May, according to John Menzer, head of the International Department of Wal-Mart.

For the overseas expansion, the company plans 130 new stores this year and another 113 new stores next year. Some stores will be opened through mergers and the acquisition of local retailers, according to Menzer.

With its agreeable shopping environment, the new outlet is going to introduce a new management concept in Beijing's retailing sector, said Wang.

The Beijing outlet is a members-only warehouse. Named Sam's Club, it is a Wal-Mart's chain store.

Located in suburban western Beijing, it offers about 4,000 products, according to Wal-Mart's statement.

(Business Weekly 07/15/2003 page2)