WAL-MART exits South Korea

WAL-MART exits South Korea
In a surprise move this morning, Wal-Mart has announced that Shinsegae has agreed to purchase the group's South Korean retail business for USD882 million. Shinsegae is South Korea's leading retailer with 79 E-mart hypermarkets in the country. It will continue to operate Wal-Mart Korea's 16 stores but rename them E-mart. Wal-Mart is the second global player to exit the difficult South Korean market in the space of a few months,
"As we continue to focus our efforts where we can have the greatest impact on our growth strategy, it became increasingly clear that in South Korea's current environment it would be difficult for us to reach the scale we desired," said Mike Duke, Vice-Chairman of Wal-Mart. "We have decided to sell our business to the market leader as we believe this is the best option for our associates, customers and shareholders." Wal-Mart will continue to have a Global Procurement sourcing office in Seoul. Wal-Mart stores in the United Kingdom, United States, Mexico and other markets carry South Korean products including apparel, toys and home textiles. The agreement is subject to the approval by the Korea Fair Trade Commission.
According to Shinsegae chief executive, Koo Hak-Suh, 'We've been in talks with Wal-Mart since March and we agreed on details earlier this month in Tokyo.” In March, the company was also bidding for Carrefour's South Korean unit. “We didn't know talks with Wal-Mart could be completed this early at that time so we continued to push ahead with both deals at the same time,' Koo said. Shinsegae lost out in the Carrefour takeover race to E-Land. Shinsegae said the acquisition of Wal-Mart’s local business will now help it to focus on its China operations. According to Mr Koo, “We don't have to aggressively expand our domestic operations as we've secured a stable domestic business base through the deal, enabling us to focus on our China business.”