WAL-MART LOOKS ABROAD FOR GROWTH

 Photo Source: http://www.tmonews.com

 

Over the past several months,  Wal-Mart's (WMT) stock has not enjoyed the same momentum shared by many of its retail peers. Wal-Mart, which closed around $56 per share on January 21, is up 12.3% since the end of August. That performance pales in comparison to the S&P Retail Index's astonishing 27.1% jump during the same period. Sluggish U.S. results have certainly played a role in weighing down Wal-Mart's stock price, as a weakened basic-needs consumer, and increased competition from dollar stores, have led to six consecutive quarters of same-store sales declines and only nominal operating margin expansion. However, we believe Wal-Mart's domestic troubles may be distracting from what could be one of retailing's more significant international growth stories.

Although we anticipate U.S. issues will eventually be resolved through merchandise mix adjustments and new store formats, Wal-Mart's international operations will likely be the company's primary growth engine going forward. This segment represents approximately 25% of Wal-Mart's revenue, and 21% of its operating income, and we expect it to average nearly 9% revenue growth annually, and generate more than one third of overall revenue over the next decade, compared with just above inflationary growth domestically (combining Wal-Mart U.S. and Sam's Club). Additionally, these estimates could prove to be conservative, as Wal-Mart has established footholds in several rapidly developing economies across the globe.

 

China to build massive trade center in Thailand

BANGKOK (AP) — China plans to build a massive $1.5 billion commercial complex in Thailand that will enable traders to send "Made In China" goods around the world without paying pricey tariffs often imposed in the West, Thai officials and Chinese state media said.

The China City Complex is expected to house more than 70,000 Chinese traders in a sprawling 5.4 million square-foot (500,000 square-meter) facility to be built on the eastern outskirts of Bangkok, Vijit Yang, chairman of the ASEAN-China Economic and Trade Promotion Association said Friday.

China signed a free trade agreement with Southeast Asian countries in January 2010 that reduces or removes tariffs on traded goods. Passing the goods through Thailand will allow Chinese traders to avoid the tariffs imposed by the U.S. and the European Union on many of their exports, said Vijit.

The plan will also give the appearance of reducing China's trade deficit with those countries, which hit $16.8 billion with the U.S. in November and $13.6 billion with the EU.

The surplus has become an increasingly sensitive issue in the EU and the U.S., which buy the vast bulk of China's exports, prompting traders to look for other ways of penetrating those markets.

Overall, China's trade has remained robust despite the global economic crisis. Exports in November jumped 34.9 percent from a year earlier to $153.3 billion, boosted by a surge in sales to other developing economies, which are recovering from the crisis faster than the U.S. and Europe.

The China Daily said the commercial center will sell Chinese-made garments, ornaments and household items, among other things.

Thailand's Deputy Commerce Minister Alongkorn Ponlaboot traveled to China on Wednesday to woo investors, the China Daily said.

Construction is scheduled to begin in March and take 18 months to complete, said Vijit, who is overseeing the project, according to the Thai Commerce Ministry.

Thai Prime Minister Abhisit Vejjajiva is scheduled to chair a ceremony in Bangkok to officially unveil the project on Jan. 18.