business news in context, analysis with attitude

• In the UK, the Daily Telegraph reports that Wal-Mart is considering making an acquisition bid for “Beijing Hualian, a hypermarket operator which owns scores of stores in the capital and other cities across China. The two sides are believed to have held some preliminary talks about a deal, although it was unclear what stage these negotiations had reached.”

According to the story, Wal-Mart currently owns 70 hypermarkets in China, plus a stake in Trust Mart, which owns another 100 stores there. A deal to acquire Beijing Hualian, the Daily Telegraph writes, “would dramatically expand its presence in the world's most populous country.” It also would cost Wal-Mart upwards of $1 billion (US), according to reports.

Meanwhile, Bloomberg reports that Wal-Mart “plans to more than double its stores in China in the next five years to tap the growing personal wealth of the country's 1.3 billion people. The expansion will help the … company broaden its reach … into smaller cities, where competition is less fierce. Wal-Mart expects the growth to help it garner 20 percent of China's retail market, said Terrence Cullen, vice president of its China operations.”

However, Cullen denies the Beijing Hualian report.

“There are lots of rumors, but I can tell you we are not buying them,” he tells Bloomberg. “There are many possible targets we are looking at, but we don't have anything at the moment.”

• Wal-Mart has announced that as part of its environmental initiatives, about 7,200 semitractor-trailer trucks already are about 15 percent more fuel efficient. According to a store in the San Francisco Examiner, the company expects to meet a target of 25 percent greater fuel efficiency by late next year. The annual savings in carbon dioxide, a greenhouse gas, would be equal to taking 67,744 cars off the road.
KC's View:
This last story speaks to a bigger issue. First, it is clear evidence that Wal-Mart is taking this environmental thing seriously. Second, think of the productivity gap this can help Wal-Mart create. If the Bentonville Behemoth get 25 percent more efficient in fuel use, that's an advantage they use competitively in other areas of its operations.

Call it the environmental gap, if you will. Wal-Mart seems to be putting distance between itself and everyone else in this area…and while it continues to get some bad press and questionable reviews from stock analysts, this could end up being an enormous advantage for the company that will dwarf many of its other advantages.