WAL-MART'S FAR EAST PUSH TO BEGIN LATER THIS YEAR

PAUL EHRLICH

HONG KONG (FNS) -- Wal-Mart Stores, Bentonville, Ark., will begin moving into the Far East with the opening of discount stores and warehouse-membership clubs here later this year.

The retailer also plans to subsequently follow up with expansion in China, the world's largest consumer market.

In Hong Kong, Wal-Mart expects to open three or four Value Clubs with a joint-venture partner, Ek Chor Distribution System, a subsidiary of Bangkok-based Charoen Pokphand Group.

The venture with Ek Chor represents Wal-Mart's first expansion outside the Western Hemisphere and will introduce the giant discount store concept to Hong Kong shoppers for the first time.

Ek Chor's parent, Pokphand Group, is the largest agro-industrial group in Asia and a major foreign investor in China. Ek Chor China Motorcycle Co., its motorcycle and automotive parts manufacturing operations in China, is traded on the New York Stock Exchange.

The initial Value Clubs will be smaller versions of Wal-Mart's successful Sam's Club membership-warehouse format. Each Value Club will range from 10,000 to 20,000 square feet, much smaller than the Sam's Clubs operated in the United States and Mexico.

"With cooperation from our new partner, we will fine-tune our retail concepts to meet the expectations of Hong Kong and Chinese consumers," Bob Martin, president of Wal-Mart's international division, said in a statement.

"However, the foundation of what Wal-Mart is all about will not change. We will offer our customers great value on a wide assortment of merchandise," he said.

Franklin Lam, a senior analyst at Salomon Bros. here, said Hong Kong rents have generally been too high to attract discount store operations. Consumers also may not be willing to give up convenience.

"Hong Kong people still place a big premium on the convenience, and in general are not prepared to drive to another part of town to save $10," he said. "Rental levels will count Wal-Mart out of Hong Kong island and force them to open stores in towns."

Finding good locations with a lot of room for parking will be difficult unless Wal-Mart opts for industrial areas, Lam said.

However, Hong Kong does have an excellent mass transit system and local shoppers are known to pack areas that provide a wide selection of merchandise in a small area, he said. No date has been set for their opening.