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Carrefour Again Becoming Wal-Mart's Chief Rival

Stocks in this article: WMT COST

Where all this comes together is back in China, where Carrefour has plans to open more than 20 new hypermarkets each year, and Wal-Mart has plans to open 110 outlets in the next three years, as we reported last month.

But China is no longer an underdeveloped market. The country has protected domestic incumbents, as it has in the Internet sector, so those incumbents are now well-entrenched. The leading player, Sun Art, has a 14% share of the big-store industry, against 11% each for Carrefour and Wal-Mart.

Wal-Mart plans to replicate its U.S. strategy in China, opening outside the big cities of Shanghai and Beijing, and building its own distribution infrastructure.

Carrefour is already inside those cities, building stores on top of its own parking garages, and has a total of 236 stores in the country.

[Read: Even With Narrowing Pay Gap, Women Struggle for Equality]

Another key difference between the two is that Carrefour uses Chinese partners, 23 of them, to stay on top of local sourcing and selling trends. One of those trends is live seafood, with large "wet areas" that can become contaminated easily. Carrefour has four labs to test its products in major cities, and is building 45 minilabs for faster tests.

Which strategy will win China, the French or the American? Investors will be watching closely, because on that question may lie the fate of both stocks.

At the time of publication the author owned shares in COST.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

 

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