Abstract

The case discusses the strategy adjustments made by the world’s largest retailer, Wal-Mart, while operating in the world’s most populous country, China. US-based Wal-Mart started operating in China in 1996 but managed to expand to only 415 stores by 2015. The retailer, like many other international players, faced problems in China and lost the trust of Chinese consumers. Wal-Mart’s globally successful policy of Every Day Low Prices failed in this market. Moreover, the retailer had to tackle fierce competition from local retailers, and was involved in various scandals which further tarnished its reputation. Following these hurdles, it became difficult for Wal-Mart to sustain and expand its revenues in the country. Therefore, the retailer adjusted its existing strategies to overcome the problems it was facing in the Chinese market. Wal-Mart made its testing and food quality standards stringent and increased investment to ensure food safety in China. Further, the case explores how Wal-Mart enhanced its reach among Chinese consumers by entering the e-commerce market. The retailer’s attempt to understand the Chinese shopping culture is also discussed. The case illustrates various reasons given by industry experts on whether China could be considered as an exceptionally tough market for international companies, including retailers. Analysts opined that the steps taken by Wal-Mart to strengthen its holding in the different market environment of China looked promising. However, they pointed out that there was no guarantee that the retailer would succeed and that only the coming years would reveal how well the strategy adjustment would work for Wal-Mart.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Explore the problems faced by foreign companies operating in China
• Analyze the position of Wal-Mart in China
• Understand how China is different from other markets
• Study the initiatives taken by Wal-Mart in China in the last few years.
• Retail activities in the cultural context.

Keywords

Wal Mart, China, Retail, Globalization, International markets, expansion, EDLP