By Greg Hugh, Staff Writer
The complete title for the August meeting of U.S.-China Business Connections (UCBC), Fitting a Big Box in a Crowded Country – Is China changing Wal-Mart or is Wal-Mart Changing China?, certainly on the surface would be a thought-provoking topic for businessmen or those interested in marketing to China, however, the presenter, Dr. David Davies from Hamline University, definitely shed a different light on the subject. You see, Dr. Davies is not an economist, MBA or marketing guru but is Assistant Professor of Anthropology and the director of the East Asian studies program at Hamline University.
Anthropologists study culture and cross-cultural interactions. “At first it might seem strange for an anthropologist to study a company,” Davies explained, “but what is a corporation but a group of people with a shared understanding of how things are done—a culture.” His study of Wal-Mart in China focuses on how the American retailer’s move to China might be affecting retailing in China even as it changes Wal-Mart itself.
The American Heritage® Dictionary offers this definition:an-thro-pol-o-gy ( n thr -p l -j ) The scientific study of the origin, the behavior, and the physical, social, and cultural development of humans.
During his presentation, Davies described an “anthropology of globalization” that shows how globalization is a dialogue between local places and global actors. In the case of Wal-Mart, a huge global actor, he argued how fitting Wal-Mart’s “big box” business model into the “crowded country” of China is really the anthropology of globalization and supports this premise by discussing how globalization and culture are in dialogue and thus how to fit a big box in a crowded country is really a cultural question.
Wal-Mart’s very successful corporate model was developed in a rural American context with a low population density and high mobility with mostly local competition. It developed with very few regional distinctions for an American population of only about three hundred million people at a density of about 1 store for every 95,000 Americans.
In China, however, Wal-Mart has been expanding in urban areas with high population densities and well-established domestic and foreign competition. In fact, comparing the strengths of Wal-Mart’s business model in the United States and China, Davies illustrated that there is quite a large difference.
For a perspective of the size and population of the United States and China, a comparison was made based on population and probable number of stores per 95,000 population. The United States with a population of 301,139,945 has 317 stores while China with a population of 1,321,851,288 would have 13,914 stores.
To illustrate some of the differences of Wal-Mart’s business practices in the U.S. and China, Davies listed them in the following chart:
(insert chart-Possible changes)
Of course, for Wal-Mart the growth prospects are huge. As China develops a class of consumers that is quickly approaching the entire population of the United States, Wal-Mart will have plenty of customers to sell to. If they ever reach a store density comparable to that of what they enjoy in United States they would have to build 13,914 stores. Of course, when you are a foreign retailer selling Chinese manufactured goods back to the Chinese—that much growth might be an uphill battle.
During the latter half of his presentation, Davies shared cases and anecdotes from Wal-Mart stores in China, and from some of Wal-Mart’s Chinese competitors. His examples suggested the various ways that the culture of Chinese business is forcing Wal-Mart to change. At the same time, however, aspects of Wal-Mart’s innovative retailing style are being adopted by Wal-Mart’s Chinese competitors.
Although there does not appear to be a definitive conclusion as to whether or not China is changing Wal-Mart, there are some definite changes that are occurring as was discussed in charts covering quite a number of topics.
(insert photos of shoppers?)(also could insert #103, Shoppers in a Wal-Mart store in China)
Davies concluded his presentation by emphasizing, “How to fit a big box in a crowded country is a cultural question that is not yet answered. It is being negotiated by customers in China right now.”