Walmart and Carrefour in China: Whose strategy is better?

Filed in archive Point of view on February 24, 2007

Walmart has recently finished the construction of a central distribution center in Kengzian (China). The place is a massive 40000 sq m facility with 70 huge doors designed to handle deliveries from trucks. While Walmart is making a central distribution center in China but Carrefour, the French competitor, has a different strategy. Carrefour relies more on local distributors to deliver direct to the stores because it believes that flexibility matters more especially when the market is new. In other words, Carrefour is building a network store by store and while it faces the challenges of uniformity in service and quality control, the cost of development is lower.

On the other hand, Walmart has its own fears. If the company can't attract local shoppers to its stores, the losses will skyrocket.

Which strategy is better? Well, after nine years of presence in China Walmart is still loss-making but Carrefour is profitable on the other hand. So we can conclude that at least till this stage, Carrefour's strategy is a better match for China's environment.

Carrefour has its eye on the customer and Walmart is spending on the back-end. I believe this approach will guarantee Carrefour's growth in the future but at the end of the day it will have different products in its stores. So in the future we may see Carrefour investing in the back-end to benefit from the synergy between its stores.