Growing and increasing competition
The problem is that before the arrival of Wal-Mart in China, there were already many severe companies in the country. In addition, their knowledge of the specifics of the Chinese market and consumers was much better. Foreign companies have constantly strengthened their presence in major cities. Also, the hypermarket sector was completely oversaturated with foreign firms, which significantly reduced the capabilities of Wal-Mart. Another factor was that the supermarket segment was also oversaturated. However, here the dominance belonged to local companies that managed to establish an effective supply chain. In addition, they owned the best trading places. Localized demand, localized supply base, and localized distribution in China also provided domestic players with an advantage in establishing strong regional dominance when it was difficult for foreign retailers to use the national presence in the Chinese market.
A considerable disparity in the income of the population
Due to the huge difference in income, it was not easy to develop a single strategy. This is due to the fact that there was no pronounced middle class in China at that time. Therefore, it was challenging to determine the establishment of acceptable prices for both the company and the buyer. In addition, it was impossible to apply the tactics of opening supermarkets in the suburbs. This was due to the poverty of people living outside of cities. Thus, the opening of supermarkets there was impractical.
Protectionism of local companies
At this point, the problem for Wal-Mart was that the Chinese government vigorously protected local businesses. This was due to the protection in the tax system and the difficulties of opening a company inside China.
Regulatory Restrictions
This problem is directly related to the previous one. The expansion of the company in China is a rather complicated process. In order to siphon off the interests of local firms, the opening of new stores by foreign companies is slowing down in China. This is due to restrictions on opening new retail outlets only in certain cities. The process was also delayed because it was necessary to obtain permission from the local authorities and the central government.