CHINA BREAKOUTS

[*MARINE 1*]

Watch Walmart!

Walmart expects China to overtake both Japan and the UK over the next five years to become the world’s second-largest e-commerce market behind the US, with projected online sales of $230bn, against a forecast $490bn in the US.




NEW YORK (Dow Jones)--Wal-Mart Stores Inc. (WMT) is making its first dedicated e-commerce push into China, hoping to tap a huge population whose eagerness for western goods and use of the Internet is exploding.

The retailer is testing an e-commerce site located in the country, planning a full launch soon, spokesman Kevin Gardner said. The site will offer products that are available in Wal-Mart's Sam's Club warehouse stores. Gardner declined to discuss whether Wal-Mart itself would be opening a site in China, saying only that no announcements have been made. Wal-Mart operates 183 namesake supercenters in the country.

By contrast, Wal-Mart has four Sam's Clubs in China, with the new website perhaps serving as a way to introduce the population to the club concept, which encourages buying in bulk and offers office supplies as well as consumables.

With the move, Wal-Mart is hoping to tap the more consumer-oriented environment that China is developing into, with a population that has somewhat more power, and money, to make free-market choices. Wal-Mart's e-commerce foray into China was reported earlier by the Financial Times.

"E-commerce is growing fast" in China, Wal-Mart e-commerce chief Eduardo Castro-Wright said at last week's Wal-Mart analyst meeting. He said the expectation for the next five years is that e-commerce sales in China will catch up with the U.S.

Chinese people are "indeed very open to the Internet, so for Wal-Mart it's a very good idea," said Esther Swilley, who focuses on e-commerce as assistant professor of marketing at Kansas State University. "And what happens to Wal-Mart will likely be telling for other retailers because Wal-Mart is the leader" as the world's biggest retailer.

Wal-Mart is among just a handful of western companies that have said they are targeting China for e-commerce, with the merchants also including Gap Inc. (GPS), but while Chinese use of the Internet is growing, just seven of the top 50 U.S. online retailers operate e-commerce sites in China, according to Forrester Research.

The situation is occurring at a time of tremendous growth for China. The country is set to overtake Japan as the world's second-largest economy in 2010, with a new Credit Suisse study predicting that total household wealth in China could more than double to $35 trillion by 2015 from its current $16.5 trillion. China currently is third in terms of the total share of global wealth after the U.S. and Japan, which have $54.6 trillion and $21 trillion respectively, and is 35% ahead of France, the wealthiest European country.

China is also the world's most populous country, with 1.3 billion residents. The U.S. meanwhile has 311 million, according to the U.S. Census Department.



-By Karen Talley, Dow Jones Newswires; 212-416-2196; [e-mail]