On Dec. 7, Walmart—an American multinational corporation and the world’s largest retailer, closed four stores in China, including Shenzhen Honghu Store, Wuxi Taihu Store, Chongqing Beicheng Store Tianjie, and Taiyuan Sanqiang Road branch.
Previously, on Dec. 3, Wal-Mart’s Wujiaochang store located in the central business district in Shanghai announced that it would also close on Dec. 10.
According to statistics, Wal-Mart has closed 80 stores in mainland China within four years.
Lu Media reports that since entering the Chinese market in 1996, the American multinational retail group Wal-Mart has become a model for Chinese retail companies. This company opens more than 40 stores every year in the Chinese market. Since 2014, however, Walmart China’s revenue growth has begun to slow down.
Wal-Mart China’s net sales for 2019 and fiscal year 2020 both declined. For the first nine months of fiscal 2021, Wal-Mart China’s 8,735 billion dollars in sales accounted for only 2.16% of Wal-Mart’s international sales.
According to a weekly “Finance World” report, from 2016 to 2020, Wal-Mart closed 80 stores in China.
In 2021, Wal-Mart closed another 32 hypermarkets in mainland China.
Wal-Mart explained that the closure was because the lease term had expired. However, many argue that with the cost of space rent and human resources increasing, the rise of online home businesses and community group purchases has made brick-and-mortar stores led by Wal-Mart lose their competitive edge.
Besides Wal-Mart, many multinational retailers such as Carrefour and Auchan Group, large French retail groups, also have underperforming operations in China. There are many reports that they will “close business” in China.
As reported by Jiemian News, Carrefour closed 14 stores in the first two months of this year alone. Auchan Group alone has transferred all shares of business operations in mainland China to Alibaba Group. In June of this year, Auchan Supermarket withdrew entirely from the Mainland China market.
In 2019, Takashimaya, a major Japanese department store chain, closed its flagship store in Shanghai and shut down operations in China. Takashimaya plans to expand its business in Southeast Asia.
Economists analyze the reasons for the exit of foreign businesses.
In an interview with Epoch Times, Yu Weixiong, an economist at UCLA’s Anderson School of Management, commented that the reasons for the exit of foreign entrepreneurs from China are:
First, China’s political environment is becoming increasingly strict.
Secondly, the business environment is unfair and unequal, causing international companies to face significant challenges and competition to develop in the Chinese market.
Third, China’s economic growth slowed down due to the high debt impact from the real estate bubble and the Sino-US trade war. These stalwart traders have predicted that China’s domestic market is not as good as expected. “The era of high economic growth in China” is a thing of the past.
Since the large-scale outbreak of the disease in Wuhan early last year, the Chinese Communist Party has adopted a policy of “zero erasure”, which has adversely affected the Chinese economy. According to the CCP Statistics Bureau, due to implementing the strict blockade policy, the total retail sales of consumer goods in China from January to February 2020 decreased by 20.5% compared to the same period last year.