UPDATED Nov. 5 to correct name of Greg Foran.
TAPEI, Taiwan (TheStreet) -- Just a decade ago someone living in Beijing could buy half a week's food and whatnot from a supermarket near home. The rest would come from a wet market, an electronics shop and government department stores, all within reach distance- and schedule-wise for shoppers going to work and back. You didn't need, say, Wal-Mart (WMT).
Now a lot of community grocers in Beijing and around urban China are gone as developers reclaim land for high-end projects, evicting entire neighborhoods as they go. Wet markets have moved out of city centers for more development. Department-store prices are climbing as people get richer, while urban traffic jams deter trips to specialty shops.
Naturally urban Chinese want to break the barriers that have put their customary shopping haunts out of reach. The quest for new places to buy and sell explains why e-commerce thrives and why convenience weighs in the success of conventional retail sales.
These factors also explain why Wal-Mart has boomed in China, with 400 stores and distribution centers there now and another 110 on the way.The American retail giant with 11,000 stores worldwide said in Beijing in late October it will open the 110 outlets around China over the next three years and close 9% of the existing ones. The effort, which will employ 19,000 people, is aimed especially at second-tier and third-tier cities (easily more than one million people each). Over the same period, Wal-Mart will remodel scores of existing China stores. A Wal-Mart store in China amalgamates enough sundry stuff in one place to cut out trips to other retailers and by all accounts sells for less than the ritzy malls -- though its China Web site doesn't list prices. Wal-Mart proposes remodeling 45 stores this year, 55 next year and 65 in 2015 partly to improve parking and store access, perfect for traffic-weary Chinese shoppers. And Wal-Mart is helped by the fixation on foreign brands over local ones in China, no matter how down-market the brand may strike people from its country of origin -- consider McDonald's (MCD) and Yum Brands' (YUM) KFC. The appeal of Chinese brands has been reduced with flap after flap about contaminated food going back to the late 2008 tainted milk powder scandals. No wonder Wal-Mart pledges on its China Web site and pledged again in an Oct. 24 company statement to keep its food safe, a no-brainer in its many other markets.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV