Investing in Emerging Market Growth: Wal-Mart, the Conqueror
By Ian Cooper
Wal-Mart, the world’s biggest retailer, wants a bigger piece of China’s $1 trillion retail market. And in doing so, it just inked a deal reportedly valued at $1 billion to take over its Chinese rival, Bounteous, by 2010 to battle French-based giant, Carrefour. (Note: Wal-Mart, which already owns 73 stores in China, will get 101 hypermarkets from Bounteous once the deal is closed.)
Wal-Mart’s international growth is wildly successful for the company. While January 31 total U.S. sales shot up 10.9% to $98.09 billion, international sales were up 29.6% to $22.73 billion.
But Wal-Mart, the conqueror, isn’t likely to wrap up its emerging market opportunities anytime soon… not as long as its international growth remains intact and strong. In fact, according to Reuters, Wal-Mart may be in talks to buy Russian hypermarket chain Karusel, which reportedly hired an investment bank for possible sale advisement. What's exciting about moving into Russia is the market of 143 million people with 2006 GDP of a trillion dollars, according to Reuters.
Even better for its emerging market expansions, middle-income homes earning over $5,000 a year in countries like China and Russia “are expected to grow to grow to 170 million by 2015 from 87 million in 2005,” according to the Samsung Economic Research Institute as quoted by The Korea Herald. “Households earning an annual income of over $5,000 are expected to spend the extra money on leisure activities such as going to a movie.”
Take care,
Ian L. Cooper, Editor, Early Alert Trader