“Buyer power” doesn’t just describe which party is more superior in a trade scenario. It comes with consequences, and Walmart has perfectly exhibited the ripple effect of when the average Chinese consumer has buyer power against the supermarket giant.

Walmart will be stocking its Chinese stores with upgraded merchandise. Walmart is opening new distribution facilities in China. Walmart is responding to market changes. 

The company is “putting a greater emphasis on better quality fresh food and groceries” by “opening new distribution facilities in China – the need for more rapid distribution will ensure [freshness]”. While this could be a tough task as Walmart risks incurring inventory wastage costs if supply exceeds demand, this added value proposition is exactly what Chinese consumers seek. In light of that, demand will match supply when this practice is put in place. This outcome indicates a shorter shelf life and turnover period for Walmart’s products, which will lower the company’s costs.

While its new distribution facilities in China will reduce Walmart’s lead time, it is simultaneously reducing the distance Walmart’s stocks travel to arrive at its stores. This is creating shared value by redefining productivity in its value chain.

Article from: <http://www.forbes.com/sites/walterloeb/2013/11/06/how-walmart-will-fight-to-be-successful-in-china/?utm_campaign=forbestwittersf&utm_source=twitter&utm_medium=social>

Image from: <http://www.thebeijinger.com/files/u93526/alg_china_wal-mart.jpg>