Beijing Hualian, one of China's biggest retail groups, has
denied a published report that it is in talks with hypermarket
giant Wal-Mart on a possible takeover bid.
Britain's Daily Telegraph reported that Wal-Mart has
asked advisers at investment bank Credit Suisse to draw up plans to
buy all or part of the Beijing-based retailer.
The newspaper cited an anonymous inside source that said the two
parties have held preliminary talks and both have been "looking
hard" at the possible deal.
But Beijing Hualian's spokeswoman Li Yiping firmly denied the
report. "We do not have such moves (underway with Wal-Mart)," she
told China Daily.
Dong Yuguo, spokesman for Wal-Mart China said corporate policy
does not allow him to comment on media reports or market
speculation.
One expert said it is unlikely that Wal-Mart would seek local
acquisitions at this stage. "It is too early for Wal-Mart to do so
in China," said Wang Yao, deputy secretary-general of China General
Chamber of Commerce.
Wang said the US firm is at the phase of laying a solid
foundation in China, so developing on its own is the right strategy
at the moment.
Wang also noted that management models for local retailers are
very different from international giants like Wal-Mart, so mergers
and acquisitions carry many potential risks.
Wal-Mart announced in February that it would acquire 35 percent
of Taiwanese chain operator Bounteous Company Ltd (BCL), the owner
of Trust-Mart. The deal also includes an option that allows the US
company to possibly become the dominant shareholder under certain
conditions.
Dong told China Daily that the partnership with
Trust-Mart has gone smoothly. "Trust-Mart is a very good company.
We have a lot to learn from each other."
BCL operates 101 hypermarkets in 34 Chinese cities, all still
under the Trust-Mart name. Wal-Mart, which entered the Chinese
market in 1996, now has over 70 stores in the country that employ
more than 37,000 people.
Beijing Hualian is partly owned by Beijing municipal government
and has some of its shares listed in Shanghai. Analysts estimate
the firm's value exceeds US$1 billion.
The local company recently formed a 50-50 joint venture with
Taiwan-based Shin Kong Mitsukoshi to open the luxury department
store Shin Kong Place in Beijing's central business district.
(China Daily July 21, 2007)
