Caixin
Dec 24, 2020 05:59 AM
BUSINESS & TECH

Walmart Closes Guangzhou Store, Further Downsizing China Footprint

What’s new: U.S. retail giant Walmart Inc. this week closed a 20-year-old store in Guangzhou, the capital of Guangdong province, reflecting pressure on retailers from rising rental costs.

Walmart cited expiration of a lease for the closure of the Guangya store in downtown Guangzhou. Industry experts said large retailers often face significant rent hikes after 15- or 20-year leases expire.

Walmart has closed three stores in Guangzhou this year, with six others in the rest of China.

Why it matters: Walmart has closed more stores in China than it opened this year, fueling concerns that the retail giant is downsizing its China presence as profit margins narrow. The company announced only one new Walmart store in China this year in addition to two higher-end Sam’s Club stores.

Walmart has reported profit margin declines for seven consecutive quarters since February 2019.

Since 2016, Walmart closed more than 80 stores in China. As of Jan. 31, 2020, the company operated 438 stores in China, down from 443 a year ago.

The accelerating closures sparked speculation that the company was joining other international rivals in pulling back from China. Walmart said in a statement Tuesday to Caixin that it remains confident in the China market and will continue expanding business there.

During the third quarter, the 10 largest supermarket operators in China altogether opened 56 new stores while closing eight.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com).

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