Move Over Wal-Mart

Competition in China’s global marketplace is heating up even more.  With South Korean Lotte entering the Chinese market through the acquisition of CTA Makro, Wal-Mart and Carrefour will face even greater pressure to distinguish themselves and appeal to Chinese customers.

Unfortunately for Wal-Mart, which has faced an unusual amount of brutally honest attention in Chinese media, and Carrefour, which has gained an infamy for being French, Lotte could be poised for success.  In addition to Lotte’s proposed growth of 300 stores over the next ten years (Wal-Mart and Carrefour both managed about 100 stores in their initial ten years), Lotte has previous experience in China selling food products.

More from Reuters:

Lotte to open 300 stores in China in 10 years

SHANGHAI, June 11 (Reuters) - Lotte Shopping Co (023530.KS: Quote, Profile, Research), South Korea’s biggest department store operator, said on Wednesday it plans to open 300 hypermarkets in China in the next decade, as it competes for market share with Wal-Mart (WMT.N: Quote, Profile, Research) and Carrefour (CARR.PA: Quote, Profile, Research) in the world’s fastest-growing major economy.

Lotte, which recently entered China by acquiring Beijing-area cash and carry wholesaler CTA Makro, will open its first Lotte Mart store in Beijing next Wednesday.

Lotte will also rebrand seven Makro outlets, located in Beijing and neighbouring Tianjin, into Lotte Marts, Lotte China Vice President Yang Xiaohong said.

Lotte, a unit of Lotte Group, is also seeking to buy more Chinese retailers and plans to expand to the eastern province of Shandong and to Liaoning in the northeast.

Lotte last year agreed to pay about 1.3 billion yuan ($188 million) for 100 percent of CTA Makro, which competes with Metro AG (MEOG.DE: Quote, Profile, Research) in China.

Makro’s outlets are being converted into hypermarkets that will compete with Wal-Mart and Carrefour, Yang said. Lotte will also open its first department store this year.

The Lotte Group’s food unit entered China in 1994 and sells chewing gum, biscuits and chocolates.

The group has also invested $1 billion to build a commercial complex in the northeastern city of Shenyang that includes a shopping centre, a theme park and hotels. ($1=6.922 Yuan)

Posted by Michael Mignano on Wednesday, June 11, 2008

Click Here for a Printer-Friendly Version