Wal-Mart Inc, the world's largest retailer, plans to accelerate store openings in China and expand into smaller Chinese cities after the government relaxed laws on foreign retailers operating in the country, an executive said.

"With the lifting of restrictions and with the talent pool we have accumulated, we can expect that the growth will speed up a bit," James Lee, vice-president of corporate affairs for Wal-Mart China, said in an interview on September 2 by telephone from the southern city of Shenzhen.

Bentonville, Arkansas-based Wal-Mart plans to open 14 superstores this year, an increase of a third, to catch up with Carrefour SA and domestic chains in China's US$652 billion retail market. China in December let foreign retailer open stores without a local partner to meet pledges made on joining the World Trade Organization in 2001.

The government also eased rules restricting foreign retailers to China's biggest cities and provincial capitals, giving them full access to the market. Wal-Mart is looking at smaller cities such as Yuxi in the southern province of Yunnan, where it currently has one store in the capital Kunming, Lee said.

Wal-Mart, which opened its first superstore in the country of 1.3 billion people in 1996, has 48 outlets in 23 cities including Beijing, Harbin, Shanghai and Shenzhen. Paris-based Carrefour, the largest overseas retailer in China, had 61 stores in the nation out of a total of 6,680 worldwide as of the end of June.

Chinese companies such as Lianhua Supermarket Holdings Ltd also are expanding to shore up their market share against foreign competition. Shanghai-based Lianhua said in April it aims to add 600 stores this year, expanding outside eastern China to become a national brand.

As of the end of June, it had 3,377 supermarkets and convenience stores, from 2,706 a year earlier.

Beijing-based rival Wumart Stores Inc has said it's sticking to a strategy of expanding around the Beijing.

Wal-Mart is counting on faster Chinese growth as its expansion slows in the US, where higher oil prices are crimping consumer spending. The company's first-half sales outside the US rose 12.3 per cent to US$29.1 billion as domestic sales climbed 9.9 per cent to US$99.5 billion.

Retail sales in China may expand 13.5 per cent in the second half of this year, spurred by rising incomes, the Beijing-based Financial News said last month, citing the State Information Centre.

A dozen large fish tanks filled with live carp, eel and other seafood dominate one wall of the fresh food section in Wal-Mart's Beijing store. Chinese customers "like to buy fresh and probably make more trips to the store than in the US or Europe, so we put more emphasis on food," said Lee.

Food typically accounts for half of total revenue in the company's Chinese stores compared with 30 per cent to 40 per cent in other markets, he said. "Our customer base is also getting more sophisticated," said Ivan Ho, who managed Wal-Mart's first Chinese outlet in 1996 and is now operations manager for northern China.

Wal-Mart also runs a Shenzhen-based procurement business, sourcing goods from China for its stores worldwide.

Last year, it bought US$18 billion worth of goods from Chinese suppliers, up from US$15 billion in 2003.

About 90 per cent of the retailer's stock in China is procured domestically, according to Ho. "China is the manufacturer to the world," he said.

(China Daily September 8, 2005)