National chain a rare breed in China
Wal-mart Stores Inc. is trying to become the nation's biggest hypermarket chain with its bid to buy Trust-Mart, a Taiwanese competitor, for close to 1 billion US dollars. It only unveils the biggest challenge for retailers is the sheer difficulty of building and running national chain in China.
Roughly the size of the continental U.S., China still doesn't have a nationwide logistics network of trucks, highways and warehouses that can efficiently deliver supplies from farm to shop shelf, said the paper.
Local tastes -- in a country with over half a dozen major dialect groups and climates ranging from tropical to subarctic -- are extremely diverse, making it hard to stock shelves in large quantities. In the northeastern province of Shandong, for example, the top carbonated soft drink isn't Coke or Pepsi. It's a local brand called Laoshan.
Half of every dollar spent on food in China goes to live and fresh products, according to Merrill Lynch & Co. Inc. estimates. "So it's very difficult to run a national chain and get efficiencies," says Merrill analyst Denise Chai, "What Wal-Mart is buying is a footprint. They're not trying to buy a brand or operations; they're just getting a footprint really fast."