WAL-MART expects no regulatory problems with Trust-Mart purchase
WAL-MART expects no regulatory problems with Trust-Mart purchase
According to Jonathan Dong, Wal-MartChina director of public relations, the retailer does not expect regulatory problems over its purchase of a stake in Trust-Mart. He said Wal-Mart has been "highly recognized" in China for market compliance, and this would likely work in its favour during any expansion. "We are proud of that and will continue to do that. We have been recognized here for following all regulations as well as internal procedures."
Mr Dong played down the likelihood that Wal-Mart's new stake will attract unwanted attention from regulators. "First of all, I don't think we can call ourselves number one here yet because we have only arranged for the stake in BCL (operator of the stores) rather than directly in the Trust-Mart stores, so it's not a simple matter of one plus two equals three."
Wal-Mart is buying 35% of Bounteous Co Ltd (BCL), which operates 101 Trust-Mart retail stores in 34 cities across China. Mr Dong also said Wal-Mart will likely have majority control of Trust-Mart's operations in mainland China by 2010. "Wal-Mart has an option to gain majority control (of Trust-Mart). As for a timeframe, we see this happening around 2010." Mr Dong said Wal-Mart will look to growth opportunities in China, whether organically or through acquisition. "If you have a look at our growth track worldwide, we've been following both greenfield growth as well as acquisitions. But this specific Trust-Mart stake is to gain the additional economy of scale we need to keep doing what we do best.” However, according to Mr Dong, the first priority will be to make the acquisition pay off. "Today is only day three of the Trust-Mart partnership, so our immediate plan is to get the tie-up going and successful. Long term, we will have to evaluate individual opportunities as they arise. We have never ruled anything (out) and that's why this happened for us in China. All options remain on the table (for continued growth in China)." He said the Trust-Mart stores mesh well with Wal-Mart's business model and standard practices. "They are complementary to what we have in China, and this goes for location as well. Actually, the two companies will be operated as two stand-alone companies running in parallel and will continue with business growth under their own banners. But there is lots of complementarity."