Wal-Mart considers further expansion in China

US supermarket retailer Wal-Mart is examining a deal to invest in one of China's biggest retail groups in a move that would boost its presence in the world's most populous country.

The Arkansas-based company has asked advisers at investment bank Credit Suisse to draw up plans to buy part or all of Beijing Hualian, a hypermarket operator with scores of stores in the capital and other cities across China. The two sides are believed to have held some preliminary talks. Wal-Mart may decide not to go ahead with an investment in Beijing Hualian but they have been looking hard at this.

Analysts think Beijing Hualian, which is part-owned by the city of Beijing and has some of its shares listed in Shanghai, would be worth over US$1 billion. One of the company's senior executives, Yves Chen, quit earlier this year to run the Chinese operations of the US retailer Home Depot.

If Wal-Mart does proceed with a formal offer to invest in the Chinese group, its growth prospects would soar. Wal-Mart operates about 70 of its own hypermarkets in the country, although a deal signed in February to acquire 35% of Trust-Mart, gave it an additional 100 outlets.

(Source: Daily Telegraph)