Wal-Mart closing three China stores

By Zhang Ye Source:Global Times Published: 2013-3-28 0:13:01

Wal-Mart Stores Inc, the world's largest retailer by revenue, is planning to shut down three superstores in China in April, a move analysts said Wednesday is designed to cope with increasing labor costs and high rents in China.

The retailer has scheduled two store closings for April 8 in Shanghai and Wuxi, East China's Jiangsu Province and one on April 20 in Shenzhen, South China's Guangdong Province, said Wal-Mart China in a statement e-mailed to the Global Times Wednesday.

The decision is a strategic adjustment of the sales network, Li Ling, senior director of corporate affairs at Walmart China, told the Global Times Wednesday, without elaborating.

Shopping cards registered with the three stores will continue to be effective in other Walmart stores in those cities, she said, noting that Shanghai and Shenzhen each have 21 stores left while three remain in Wuxi.

Given the sluggish performance of the domestic retail industry since 2012 and rising costs, many superstore operators in China, especially foreign-invested ones, are being forced to close stores, Fan Jie, an industry analyst from Adfaith Management Consulting, told the Global Times Wednesday.

Foreign retailers are undergoing a more difficult time in China than their domestic peers because the former spend more on management and often rent larger areas with longer leases, Zhang Wenze, a Beijing-based industry insider, told the Global Times Wednesday.

Zhang revealed that a Walmart superstore in China usually covers 20,000 square meters, so rents are very high.

The rents of stores in 2012 rose by 10 percent year-on-year, said Fan, predicting that the situation will not improve in 2013.

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