Chen Yaochang, who has been the president of Wal-Mart China for a whole year, is entering an important moment in his life. Today, at Wal-Mart's China Year Beginning Meeting (YBM), Chen Yaochang will hand over the first report card to Wal-Mart. This YBM, which is held on Tuesday, the fourth week of March every year, will be attended by hundreds of employees of Trust-Mart for the first time this year, in addition to colleagues from Wal-Mart in China and global procurement.
In 26, Wal-Mart, frustrated by South Korea and Germany, set China as the strategic focus in Asia, but the China market, which lags behind Carrefour in opening speed and performance, is in a chaotic situation of alternating old and new management and just acquiring Trust-Mart. Chen Yaochang was transferred to Wal-Mart at the end of 26 and officially took office in February 27. Subsequently, Wal-Mart, which has always been low-key, became the protagonist of many topics in just one year, including high-level changes, downsizing and layoffs, the game with Langsha, the relocation of headquarters, and the formation of trade unions. But at the same time, the new coach of Wal-Mart China, who touched these most sensitive nerves, lived in seclusion and refused all media interviews.
Until the day before YBM was held, Chen Yaochang and Dong Yuguo, senior director of Wal-Mart in China, were interviewed by reporters for the first time in Shenzhen. It is understood that Wal-Mart has just announced its performance in 27, and 8% of its market share of continuous growth in overseas sales comes from Mexico, Canada and China. Among them, the sales in China market increased by double digits, and the sales growth rate of stores over one year was two to three times faster than that of their main competitors.
I enjoyed the process of integrating Trust-Mart.
China Business News: In February last year, Wal-Mart bought a 35% stake in Trust-Mart for $264 million. At the same time, Wal-Mart also provided $376 million in loans to other shareholders of Trust-Mart in exchange for another 3% of the voting rights. In other words, since February 27, Wal-Mart has obtained 65% of the voting rights of Trust-Mart. Can you tell us about Wal-Mart's current process of integrating Trust-Mart and what difficulties it has encountered?
Chen Yaochang: By March this year, Trust-Mart has just joined for one year, and we are very satisfied with its cooperation, which provides more space for suppliers to play their resources. For example, Wal-Mart's own brand suppliers, which used to have only 1 stores, have now become 2. This year's YBM has more than 3, people, and each trust-mart store will have 8-1 colleagues to participate. Trust-Mart's products are well localized, which is more authentic and closer to customer demand than Wal-Mart's products in the same region. Wal-Mart has learned a lot from the trust-mart product structure and projects in Chengdu and Chongqing. On the other hand, Trust-Mart is learning how Wal-Mart can operate more effectively under the central control. Wal-Mart enjoyed the integration process of Trust-Mart without many difficulties.
China Business News: What attracts most people's attention now is that Wal-Mart will not renew the employment contracts of 18 middle and senior managers in Trust-Mart's East China, South China and West China after their employment contracts expire. The industry believes that this is the beginning of Wal-Mart's major exchange of blood for Trust-Mart, right?
Dong Yuguo: In fact, besides paying attention to these 18 people who will not renew their contracts, we should also know that 9% of Wal-Mart employees whose contracts expired in March have already renewed their employment contracts.
China Business News: In July last year, when Wal-Mart streamlined its organization, there was a large-scale layoffs. It is said that Wal-Mart abolished the administrative department and all managers, and changed six of the 1 managers in the mall into assistants and four into directors. At least 1 to 12 people were reduced in each store, and the number of layoffs was close to 1,. What was the reason for this practice at that time?
Chen Yaochang: It was a natural trend to streamline the organizational structure last year, and it was not the first time Wal-Mart did it in China. We have streamlined the company's structure mainly because of the market demand. It is not only to save costs, but how to make the process operate more efficiently. In fact, the talents we saved have gone to support the opening of new stores. Last year, Wal-Mart opened 3 new stores, which is an increase in staff costs. On the other hand, stores that save costs can give more discounts back to customers.
Continue M&A in China
China Business News: Previously, the British Daily Telegraph reported that Wal-Mart had asked an advisory group of Credit Suisse to draft a plan for the partial or total acquisition of Beijing Hualian Supermarket. Although the above news has been denied by both parties, will Wal-Mart consider M&A in China later?
Dong Yuguo: When we acquired Trust-Mart, we confirmed that we have the right to become its largest shareholder in the next three years. At present, this plan is progressing well. At present, Wal-Mart has opened stores through its own investment and also expanded through mergers and acquisitions. Since mergers and acquisitions have set a precedent, we will not rule out continuing to adopt mergers and acquisitions in China in the future.
China Business News: You just mentioned that Wal-Mart opened 3 stores in China last year, but in fact, there were only 14 new stores in 25 and 15 in 26. Does this mean that Wal-Mart's expansion in China will continue to accelerate in the future?
Chen Yaochang: China is one of the markets that Wal-Mart attaches great importance to. The speed at which we open a store is actually to achieve the goals set by the company. In the future, we will develop in a balanced way in third-and fourth-tier cities and second-and third-tier cities. The cost of land in first-tier cities is getting higher and higher, but second-and third-tier cities are also growing. Considering the cost, balanced development can reduce the cost as a whole. In fact, the market in China is very large. Last year, we developed rapidly, but the development was very scattered. Next, the most important thing for us is to meet the development needs of our customers and employees. We won't mention profit at least at this stage.
Wal-Mart, a multinational giant born in a "five cents and one dime" store, has always been proud of serving the working class. Among its 11 million customers every week, the vast majority (64%) belong to the class that eats up and runs out, with an annual salary of $25, to $5,. However, in recent years, it has opened more and more stores in rich areas, and the traditional cheap strategy has begun to be "subverted". For example, in the past, the TV sets it sold were mainly miscellaneous brands, and a 19-inch color TV set cost only $1. Now, a 6-inch screen with a price of $1,7 has appeared on the shelves at the same time, and it is also a famous brand. Last year, 178 newly opened stores all had food departments, and this food department has the scale of a general large supermarket, with prices ranging from low to high.
In addition to the changes in customer structure, the strategies of competitors have also stimulated Wal-Mart's idea of "climbing high". With the introduction of high-end goods by low-cost stores such as Target, the traditional discount store has virtually moved closer to department stores. In addition, the land in urban areas is more expensive, and the cost of opening a store is higher than that in rural areas. It is always more profitable to sell a digital camera with a few hundred yuan than something with a few dollars.
However, Wal-Mart has two "hidden rocks" in this move. First, this strategy may alienate traditional customers. Imagine what those customers who are struggling with their income will think when they see many goods on the shelves of Wal-Mart that they can't afford. French cookware, Swiss chocolate, Japanese high-end electrical appliances ... These are not essential consumer goods for ordinary families. Their cost structure and market demand are often very different from those of previous Wal-Mart products. In retail jargon, diamond rings are not necessarily more profitable than milk. Therefore, the risk of selling high-end goods is much greater. Besides, it is sometimes difficult to have both "good quality" and "low price", and Wal-Mart has already suffered in this respect. Two years ago, it accidentally bought counterfeit goods when purchasing brand-name clothes, and was sued by a genuine company, and finally compensated millions of people to make peace.
second, how to make rich people step into the store is also a difficult problem. It is human nature to hate the poor and love the rich. In the United States, Wal-Mart "mingles" with the poor. Will the rich feel uncomfortable when they walk in? However, Wal-Mart executives believe that the rich also like to bargain. For example, a Puls Mart on the outskirts of Seattle has a group of loyal Microsoft customers, who are called "Millionaire Club". Although the rich are rich, they are not stupid. They know the difference between staple goods and quality products with reasonable prices.
there is another possibility that needs to be considered, that is, after the upgrade of Wal-Mart, will it give new cheap stores an opportunity? The secret of Wal-Mart's success is not mysterious. Its innovations in inventory management, purchase policy and staffing are easily imitated by competitors. However, Wal-Mart's super size gives it a greater advantage than its competitors. For example, it won't be long before it entered the supermarket business and became the champion in this field. Some customers who used to only visit high-end stores occasionally go to Wal-Mart to buy daily necessities, and are pleasantly surprised to find that it has all-encompassing features, such as everything they need for a holiday, and they don't need to travel to 5 or 1 stores to buy all the things they want.
The success or failure of Wal-Mart is not only related to the US retail industry and the US economy, but also closely related to the China economy. A casual visit to a Wal-Mart store will reveal that many products are labeled as "Made in China". That is to say, behind Wal-Mart's high quality and low price, it has the credit of China's manufacturing industry. Of course, it has also greatly promoted China's exports and China's economy. Some people say that "one store brings prosperity to the economies of the two countries". Although this statement is exaggerated, it is not all a lie. Whether the change of Wal-Mart's sales strategy will affect this is worthy of people's attention.
As soon as Chen Yaochang took office, he pointed to the most sensitive nerve of Wal-Mart China-personnel adjustment. He drastically implemented the policy of streamlining the army and simplifying administration, striving to save the cost of human resources and improve efficiency at the same time.
At present, the personnel adjustment in Wal-Mart China is vigorous and unambiguous, including high-level exchange of blood and downsizing and layoffs.
On December 13th, 27, Wal-Mart announced to the world that as the world's largest retailer, its sales in China in 27 exceeded its competitors by two to three times. For quite some time, Wal-Mart China and even the Asian region have fallen into a trough: the Japanese business is independent but not good; The South Korean region is losing ground, and Wal-Mart China is particularly valued, but it is also in jeopardy under the competitive pressure of powerful rivals such as Carrefour. Today, Wal-Mart China is once again alive in the difficult cracks, and Chen Yaochang, the new president, has contributed a lot.
Appeared in a calm atmosphere
In November 26, Chen Yaochang joined Wal-Mart and officially took over as President and CEO of China in February 27. Since Zhang Jiasheng, the former president of Wal-Mart in China, resigned in March 25, this position has been vacant for nearly two years. However, the appearance of Chen Yaochang, who was not well-known in the mainland before, made the outside world generally feel somewhat unexpected. Indeed, Chen Yaochang's appointment was a bit abrupt, even the president of Asia, Zhong Haowei, didn't know it. He even recommended an American candidate to the headquarters.
Chen Yaochang's career started as an analyst at McKinsey for more than 2 years. Two years later, he moved to BMG Records, a subsidiary of Bertelsmann. At BMG, Chen Yaochang began a period of rapid development in his career. In 1989, he was promoted to the corporate development manager of the company in new york, USA, and was soon appointed as the chairman and general manager of BMG in Taiwan Province, until he became the chairman and general manager of BMG in Hongkong and Chinese mainland.
Finding the combination point with Wal-Mart stems from Chen Yaochang's experience in joining Pan-Asian retail giant Milk International Holding Group. This is the starting point for Chen Yaochang to contact the retail industry. Milk International has more than 3, stores in Asia, operating supermarkets, beauty salons, convenience stores and restaurants. Among them, there are over 25 in China. In Milk International, Chen Yaochang served as the CEO of Wellcome Supermarket in Taiwan Province. In November, 21, he was promoted to the position of chairman of North Asia and director of the milk management service company under the Group, and was fully responsible for the retail business of the Group in China, Hongkong, Taiwan Province and South Korea, involving more than 1,4 stores, with sales of about US$ 2.7 billion. He also participated in several M&A transactions of the company as a regional director.
There are two highlights in Chen Yaochang's retail business: Wellcome Supermarket and 7-Eleven Convenience Store. Wellcome is the leading supermarket enterprise in Hong Kong and Taiwan Province, while 7-11 is the largest convenience store in the world with operating licenses in Hong Kong and South China. The rapid development of 7-11 in South China is a witness of Chen's outstanding leadership. From this point of view, it is no accident that Chen Yaochang became the president and CEO of Wal-Mart in China. Wal-Mart needs and has been looking for a long-term career background, excellent leadership, rich retail experience and familiarity with the retail business in China.
However, the challenges faced by Chen Yaochang are quite severe. In 26, Wal-Mart successively withdrew from South Korea and Germany, and the poor performance in Japan made China one of the key points of its global strategy. However, Wal-Mart, which entered the China market in 1996, did not seem to show the style of the world's leading retailer, and its opening speed and performance lagged behind that of French retailer Carrefour. On the other hand, in order to expand the China market, Wal-Mart just acquired Trust-Mart before Chen took office, and the task of integrating and saving Trust-Mart was placed in front of Chen. At the critical moment of business development in China, Wal-Mart hopes that Chen Yaochang can bring breakthrough progress to its business in China and even in Asia.
Will Chen Yaochang become a revolutionary figure in Wal-Mart China? Can Chen Yaochang push Wal-Mart to achieve a historic breakthrough in its 11th year in China? The outside world has always been paying attention to Chen Yaochang.
In December 27, Chen Yaochang, who had been in office for less than one year, handed over a good answer sheet: "In 27, the turnover growth rate of all the stores we opened for more than one year was above double digits. This far exceeds our other major competitors in China. ". By the end of December 27, Wal-Mart had opened 94 supermarkets in China, and 24 supermarkets were added in 27 alone. In 25 and 26, Wal-Mart maintained an annual growth rate of 14 to 15 supermarkets. This is a rare expansion speed of Wal-Mart in China for more than ten years.
New Official's New Deal
Since he officially took office as the president of Wal-Mart in China in February 27, Chen Yaochang quickly made the outside world feel his extraordinary courage. Unlike his predecessor Zhong Haowei's gentle style, Chen Yaochang is vigorous and vigorous, showing a typical tough style. Many people in the industry even think that Chen Yaochang's hard-core style may be the key to help Wal-Mart break the ice in China.
Chen Yaochang, who took office in February, appointed Tian Ruikun, who once worked in The Home Depot, an American home furnishing company, as the vice president of Wal-Mart's development department in March. Subsequently, Meng Yongming, the former chief executive officer of Wal-Mart, was stationed in Trust-Mart as the chief operating officer. In June, Li Chengjie, vice president of Wal-Mart's China affairs department, and Yu Jianyi, the chief operating officer second only to the president, officially left their posts. Four of the five former Wal-Mart executives in China who reported directly to Zhong Haowei, President of Asia, have changed their positions. These four people are in charge of Wal-Mart's core procurement, operation, development and other departments. Together with Zhong Haowei, they were once called "American Club".
Wal-Mart China will open on July 1, 27 after the top management changes are settled.