Wal Mart in China Assessing Walmart's Success

Wal Mart in China Assessing WalMart's Success in China: Lessons Learned in Global Expansion WalMart Corporation (NYSE:WMT) continues to experience profitable growth in China despite the numerous cultural, legal and political barriers and constraints it had to face and overcome to achieve this. Today China is consistently one of the most profitable, promising growth markets for WalMart (WalMart Investor Relations, 2013). The initiatives, strategies and tactics undertaken to accomplish this over the last seventeen years is the basis of this analysis.

Analysis Of WalMart's Growth in China Unlike the failures in South Korea and Germany, where WalMart relied on a very ethnocentric-based strategy of defining supplier networks, devising pricing strategies, and developing stores that were identical to their U.S.> operations, in China WalMart took an entirely different approach (Ming-Ling, Donegan, Ganon, Kan, 2011). Starting with the Chinese government at the regional and national level, WalMart executives were very clear about the need for sharing vast amounts of data very quickly over their satellite networks.

As China has traditionally been extremely paranoid about data being sent outside their nation, WalMart executives chose this area to focus on first realizing it would make or break their success in the communist-run nation (Taylor, 2003).

After approximately eighteen months of building a Chinese-specific supply chain, creating unique storefronts that aligned with how Chinese consumers preferred to buy, and developing entirely new checkout lane approaches that would save time with unique, one-of-a-kind items only found in Chinese WalMart stores, WalMart invited in Chinese government officials to show they how the uploads of sales data worked (WalMart Investor Relations, 2013). The Chinese government was concerned about the potential for WalMart to act as a front for CIA spying (WalMart Investor Relations, 2013).

Yet when the actual Electronic Data Interchange (EDI) command codes were shown to the Chinese officials, they realized it was basically a series of transaction sets and WalMart was approved to deliver daily uploads of their sales data. WalMart has overcome this political and legal hurdle to grow quickly, employing 43,000 associates and selling to over 5 million customers a week throughout China (WalMart Investor Relations, 2013).

WalMart also was able to invest heavily in predictive analytics applications internally and soon learned that creating a tiered roll-out city strategy would be the most efficient and less prone to risk (Ming-Ling, Donegan, Ganon, Kan, 2011). The first wave or tier of cities includes Beijing -- Tianjin, Shanghai, Guangzhou (Ming-Ling, Donegan, Ganon, Kan, 2011).

In conjunction with this strategy of pursuing key cities they found to be the most aligned to their current business and supply chain processes, WalMart also was able to orchestrate its overall value chain much more effectively using a collaborative approach with the Chinese government, providing them insights into how they were designed and implement their value chain. An analysis of the WalMart value chain in China is shown in Figure 1.

WalMart was able to gain a beachhead in the market by concentrating on areas of weaknesses they had seen in previous expansion strategies. These included created a more thoroughly-based planning approach to cultural, legal and political.