A report on Bloomberg today announced that Wal-Mart is the latest retailer to take steps toward developing its own sites in China. This news follows moves in recent months by TESCO, IKEA and other retailers to develop shopping malls and other retail sites to accommodate their expansion plans in the country.
The Bloomberg report quoted Ed Chan, chief executive officer of Wal-Mart’s China operations as saying at an investors’ conference, “When the location is suitable and site is available and meet our needs, we’ll go and work with the government directly to acquire” the land-use rights.
Wal-Mart is building its seventh Sam’s Club outlet in the northeastern port city of Dalian, on the first plot of land it bought in the country.
During March, IKEA announced plans to build more malls in China, TESCO unveiled the acquistion (along with HSBC) of three malls in China, and even local beverage giant Wahaha revealed plans to develop its own department stores.
The motivation behind these decisions is increasingly the challenges that retailers face in securing favorable locations for their stores, and the realisation that in order to get the quality of development and location that they need to be successful in China, they will need to acquire the real estate assets directly, rather than lease them from developers as they would do in most markets.