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Many analysts predict Carrefour, a skilled international operator, will provide some of Wal-Mart China's stiffest competition. The French company generates $2 billion in revenues from 62 stores in China, making it the fifth-largest retailer there, according to Accenture research.
Wal-Mart, by contrast, is China's 19th-largest retailer. Wal-Mart China's SuperCenters lag their U.S. counterparts in revenues, generating on average $35 million annually, compared with $80 million to $120 million in the U.S.
Chinese spend an average of about $5 on a typical Wal-Mart visit.
"The average ring [customer transaction] in the U.S. is around $27, so $5 is not quite doing it," said Smith Barney analyst Deborah Weinswig, who also took part in the March tour in China. "The upside is they've got really cheap labor, but you've also got greater wear and tear on the stores without necessarily getting the sales."
Wal-Mart China needs another five years of growth before it makes a significant contribution to the larger company, she said.
Wal-Mart's stores are "in their infancy in China,'' Augustine said. "I thought their format was much like their competitors. It wasn't so terribly unique, but that's probably OK at this stage."
Still, domestic companies are gaining clout in China. In 2004, the Chinese government formed the nation's largest retailer, $8.1 billion Shanghai Brilliance Group Co. Ltd., by merging China's largest department store, drugstore and hypermarket chains to form a conglomerate overseeing 8,000 stores.
Sandy Kennedy, president of the Retail Industry Leaders Association, an Arlington, Va., lobbyist for mass merchants, traveled to Shanghai this month with representatives from Home Depot, Target Stores, Wal-Mart and Gap.