Doubts cast on Wal-Mart price war
Updated: 2007-07-31 17:40
Wal-Mart recently waged its largest ever price war since its presence in China 11 years ago. However, many consumers cast doubts on the real purpose of this retail giant's price campaign.
Beginning July 5, all of Wal-Mart's 80 shops gave a discount up to 20 percent to more than 1,000 items, mainly foodstuffs, according to insiders. It is the first time in Wal-Mart's history that it has cut so many items' prices.
The move suggests Wal-Mart is eager to lure more customers in China, a market in which it has not enjoyed the competitiveness it has at home.
However, the price reductions are not attractive enough, and some discounted products' prices are still higher than those in other markets.
A package of 120-gram Lays potato chips is priced at 7.5 yuan after a 45 percent discount, higher than that of Wumart, another supermarket chain store in Beijing. Meanwhile the price of one package of Qiaqia sunflower seeds is 5.4 yuan in Wal-Mart, but it only costs 4.8 yuan in Carrefour.
"My wife cares about the prices so much, but she was disappointed when back," said a buyer surnamed Li.
"I have been to Wal-Mart twice these days, but hardly found the discounted items," said another anonymous buyer.
Home supplies and home appliances are included in the new pricing package, with lowered rates of 10 and 15 percent respectively.
Miss Wang plans to buy a Midea electrical kettle in Wal-Mart at the new price, but she found the price was 269 yuan after a 10 percent discount, while the product's price in Carrefour is 238 yuan.
Wal-Mart's discounted prices fail to match those of its competitors, which suggests that offering the lowest prices is not part of the company's strategy.
Dong Yuguo, supervisor of the public relations department at Wal-Mart, said the price reduction is the result of controlling costs and our suppliers' efforts to provide better prices in a proper time."
"Our 'Every Day Low Prices' strategy can not ensure buyers get goods at the most favorable prices," said Dong, who emphasized Wal-Mart’s weak distribution system can not help reduce cost.
Wal-Mart's strategy is based on big-dimension purchasing, flexible logistics channels, advanced information technology systems, and sophisticated shop management, which ensure the lowest prices for global buyers. However, according to an anonymous expert familiar with the matter, in China its competitive edge is blunt.
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