Wal-Mart Tries Once Again in Southeast Asia

An article today from Reuters brings news that Wal-Mart is looking to expand its presence in Southeast Asia. Wal-Mart has come to rely more and more on its international stores for sales growth, and expanding into Southeast Asia is only one part of the company’s international expansion plan. From Reuters via the International Herald Tribune:

Wal-Mart Stores, the world’s biggest retailer, is considering its first stores in Southeast Asia and expects to approach 10 percent growth in international sales to $100 billion this fiscal year despite a global economic slowdown.

This is not, however, Wal-Mart’s first venture in Southeast Asia. The company’s first effort in the region was a partnership with Indonesia’s powerful Lippo Group. In 1995, Wal-Mart and Lippo worked together to open stores in Jakarta. As the New York Times reported:

The 180,000-square-foot Wal-Mart Supercenter, planned for Lippo Village, a Jakarta mall owned by the Lippo Group, will be the first in Indonesia. Wal-Mart, which is based here, said it would provide expertise and management services for the store, which Lippo will own. By the time the store opens, Wal-Mart will have stores in Indonesia, Hong Kong and China, company officials said.

The partnership failed. Less than three years later, after opening two stores in Jakarta, Wal-Mart announced that it was abandoning the project. From BusinessWeek:

Wal-Mart Stores Inc. confirmed on Wednesday, Feb. 25, that it’s trying to end a franchise agreement with a unit of Indonesia’s powerful Lippo Group. The partners operate two stores in Jakarta under the Wal-Mart banner. About 13 U.S. expatriates, who supported the store operations, have left Indonesia, a Wal-Mart spokesman says.

Even before the Lippo debacle, Wal-Mart partnered with Thai company Charown Pokphand Group. That partnership was also a failure, and ended after less than a year. Will Wal-Mart’s most recent efforts to build in Southeast Asia prove different than its previous attempts?

Wal-Mart sees potential growth in Southeast Asia [Reuters via International Herald Tribune]

Posted by Research Team on Wednesday, September 03, 2008

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