Wal-Mart to join the Shanghai Direct Electric business to enter the market

After experience in the early and Jingdong mall financing talks, shares of the 1th store market groping, Wal-Mart finally decided to put aside the image of the veiled, from behind the investors to the stage of the operator, the official launch of its business in China.

June 27, Wal-Mart and Shanghai Business Council signed the "on the promotion of Wal-Mart in Shanghai to develop e-commerce cooperation framework memo." Under the MOU signed by the two sides, Wal-Mart will set up Wal-Mart China headquarters in Shanghai to fully handle its global e-commerce operations in the Chinese market.

"In the short term, maybe we still don't feel the impact that Wal-Mart has on the industry, but given that Wal-Mart has strong purchasing bargaining power, perfect supply chain management and strong capital, once it moves to do department stores ' online retailing, it will bring tremendous impact and change to the current consumer market. June 29, Analysys International E-commerce analyst Shou sent in the interview with the reporter said.

Change the way straight into China

Many in the industry have expressed surprise at the Wal-Mart's move to set up its local headquarters in Shanghai directly. It was only 1.5 months ago that Wal-Mart had just announced a stake in the number 1th of its domestic electric business.

Zhong, a researcher at the China e-Commerce Research Center, has judged that Wal-Mart's electric business in China will mostly take the form of a direct stake in a Chinese company.

This judgment is in line with Wal-Mart's previous investment logic in the domestic electricity market. At the end of last year, Wal-Mart approached Jingdong Mall, according to Liu, chairman of Jingdong Mall, the two sides negotiated more than half a year, the valuation and so on all agreed, but eventually Wal-Mart in the agreement required to be able to hold the Beijing east, until the overall acquisition, rather than simple investment, which led to the end of the cooperation between the two sides.

At the stake in store 1th, Wal-Mart has said the deal is expected to be completed within 60 days, and is still in operation. June 28, shop 1th an insider told the newspaper Reporter: "This case has not been finalized, the recent high-level with the lawyers are still in the management of the matter." ”

When the outside world thinks that Wal-Mart may follow the "first-stock" capital operation mode, and eventually backdoor shop 1th into the Chinese electricity market, Wal-Mart in an unexpected way will be the headquarters of the Electric company directly settled in Shanghai.

"This should mean that Wal-Mart wants to build a fully owned online retail platform." "One analyst in the electric business industry thinks.

As a result, Wal-Mart's electric business in China has become 3 sectors, namely, the newly established electric business China headquarters, the 1th stores that are currently in stock and the Sam's Member store online mall which was launched in Shenzhen last November.

How do the three major business sectors in the future to straighten out the relationship? If there is competition in the industry, will reorganization and integration be chosen? Wal-Mart said the current restructuring is unlikely. "We believe that all of these business are complementary, which will allow Wal-Mart to build a more solid foundation in the field of electricity, and provide consumers with another way to more convenient shopping." Wal-Mart's public relations director responded to our correspondent.

The above 1th store insiders told us that the shares of the 1th store is Wal-Mart, the United States, Wal-Mart China has not intervened, for Wal-Mart in Shanghai to set up the headquarters of the electrical business may be the impact of the current cannot be assessed.

or build a joint venture.

At the signing ceremony on June 27, Shanghai Vice Mayor Baojun, Deputy Secretary-General of Shanghai Municipal government, Shanghai Municipal Commerce Committee director Hailin, Wal-Mart Global executive vice president, Wal-Mart Asia CEO Besche and other political and business figures.

"This is not a simple public relations show, behind the Shanghai municipal government and Wal-Mart deep cooperation intentions." An observer on the scene said.

Just in June, the 2011 China (Shanghai) International Network Shopping Conference Forum, the Shanghai Municipal Commerce Committee director Hailin said, although the domestic has a number of well-known platform, but such as Taobao, Dangdang, excellent network and other outstanding enterprises have not settled in Shanghai, and have these enterprises compared to the city, Shanghai's Business-to-consumer development is relatively weak.

In this respect, the Shanghai municipal government has proposed to vigorously foster the development of the company, to gather a group of domestic and foreign emerging network shopping enterprises to Shanghai development, to create a local "Taobao" Shanghai has become a major goal of E-commerce development.

"Wal-Mart's electric dealer headquarters in Shanghai should be a very important step for the Shanghai municipal government to nurture local enterprises and promote industrial transformation and upgrading." "The above analysis.

Wal-Mart also needs support from local governments. According to the Ministry of Commerce issued the revised catalogue of foreign investment industry guidance, online sales belong to the Chinese government "restricted foreign investment industry" one, this undoubtedly to Wal-Mart in China's business development has brought certain policy risks.

Wal-Mart's PR director said in an interview with our correspondent that Wal-Mart maintained good communication with the central Government and the relevant governmental departments in Shanghai and was supported by the two-level government. Shanghai attaches great importance to the development of E-commerce, and in the city "Twelve-Five" plan to create a smart city for the future, which coincides with Wal-Mart's development strategy in China.

Asked whether Wal-Mart would set up its own electric operator, the official said that whether Wal-Mart's future development model in China or whether or not to set up a company is still in the talks with the Shanghai municipal government, currently unable to disclose further details.

However, the analysts believe that since the electric business sector is a foreign-restricted investment sector, Wal-Mart and Shanghai, the eventual establishment of a joint venture is likely to be very large.

It is understood that the two sides signed a memorandum of understanding on the content of the agreement, but the relevant content of the MOU has not been disclosed to the outside world. June 28, an official of Shanghai Municipal Commission told the newspaper reporter, because did not get the approval of Wal-Mart, at present inconvenient to the "Memo" content to the outside world publicity.

Wal-Mart executives told our correspondent the contents of the MOU include: Wal-Mart will actively introduce the advanced management experience accumulated in the traditional retailing and E-commerce fields to China, and in cooperation with the Shanghai municipal government, we should bring in the high-end talents with international background and rich industry experience.

Wal-Mart's China headquarters will report directly to Wal-Mart's global E-commerce emerging market Executive Vice President Huan Ren and Wal-Mart Asia's president and CEO Besche, according to people close to Wal-Mart. Such a framework means that Wal-Mart's business and offline entities store business in China has the same status.

Impact on the market structure of the Business-to-consumer

At present, the top three in the consumer market Amazon, Jingdong Mall, Dangdang, in addition to operating their own professional characteristics of the 3C business, book business, are involved in department stores online retail.

It can be foreseen that in the domestic future consumption level to maintain a stable situation under the large framework, such as Wal-Mart, such as a group of traditional retail giants in the field of electronic business, will inevitably be on the existing market structure of the consumer impact. The competition from the industry will soon become a contest between the electric business and the traditional retailer.

"The market size of the total plate is fixed, you are more than others will certainly be less, Wal-Mart's involvement in the electrical business of the previous several major electrical business enterprises in the department store plate will cause what impact, it is difficult to judge." "Shou sent the expression.

CIC Consultant Retail industry researcher Du Yan to our correspondent, Wal-Mart in the United States to carry out electrical business in the early hours, so accumulated a lot of operational experience, while Wal-Mart has a large supply chain, a strong global procurement system, the price advantage of outstanding, strong bargaining power, these are the advantages of Wal-Mart operators.

"The key is to see when Wal-Mart can launch its own electronic business platform," Shou said. If it is 3-5 years later, then other electric business enterprises will be further growth and development, wait until the market share of these enterprises more and more mature, procurement, logistics, the market will leave Wal-Mart not too much space. ”

At present, the traditional retail giants in the electric business "menacing" is not the Wal-Mart, the 2010 retail industry ranked the top three suning (sales 156.2 billion), Gome (154.9 billion) and the Hundred Group (103.7 billion yuan) have launched the online business.

Three of their respective sales are over billions, and the electric business industry, even Jingdong Mall is just 10 billion yuan sales. This means that, compared with traditional retailers, electric companies have no advantage in purchasing bargaining. Dangdang founder Guoqing on its microblog, said Gome, Suning's purchase price is 8 points lower than Jingdong.

However, it is a good thing that the traditional retailer's online retail costs are almost twice times higher than those of the electricity dealers, thanks to the lack of experience in electric operators.

"Now traditional retailers are also facing several problems: first, although the strategy has put online retail to a high status, but the actual investment is insufficient, the lack of online system construction and logistics distribution." The second is afraid of the impact of their own offline business, making the price advantage of online goods is not obvious. Because the enterprise on the one hand will worry about the phenomenon of commodity low price fleeing goods, on the other hand, there is conflict of interest between the shopping department and the entity Store department, which is difficult to coordinate. "Shou sent to the newspaper reporter.

However, traditional retailers are becoming more and more aware of these problems, Wal-Mart's China headquarters has been from the corporate framework and the entity Store division, and the Hundred group in increasing investment, has self-developed network payment platform "An Bao" to promote the development of their own electric business Suning Online Mall is more than 2 billion yuan sales on the basis of last year, shouting out this year to reach 10 billion yuan sales scale slogan.

All indications are that the rivalry between the two camps is only just beginning in the business market.