Business Briefing - Walmart China

Business Briefing

China is a lucrative market for Wal-Mart, given the population and the size of this market. However, Walmart has not been able to replicate its success in the US market, opening thousands of stores and achieving the dominating position. In fact, Wal-Mart has experienced slow growth and closed several underperforming outlets in recent years. To succeed in Chinese market, where consumers tend to trust local retailers and where food safety is a big concern, I recommend Walmart work closely with well-recognized local suppliers to ensure the quality of food and build trust among Chinese consumers.

To justify this recommendation, we need to first understand the consumer behavior and buying decision. Chinese people usually associate discounts and low prices with poor quality especially when it comes to food. They are actually more concerned about the safety and quality of the food. This explains why Chinese people are slow to embrace the Walmart’s low prices and broad merchandise selection. So price is not the primary concern when they buy food. To make it worse, Walmart had several food safety scandals in recent years, such as mislabeling regular pork as more expensive organic pork and selling sesame oil which exceeds standard amounts of certain chemicals. Those incidents hurt Walmart’s reputation and should never happen again. The second thing about Chinese consumers is that they tend to trust local retailers more than foreign retailors. Building strong partnership with local suppliers may help Walmart better understand local taste and build customer trust.

In conclusion, Walmart should work with reliable suppliers and strengthen supervision of food supply chains.