SHANGHAI/HONG KONG (Reuters) - Wal-Mart Stores Inc (WMT.N) has named an industry veteran, but a relative newcomer to China, to run what is a strategically crucial business for the world’s biggest retailer as it faces tougher competition in the fastest growing major economy.
The appointment of Greg Foran as president and chief executive of Walmart China caps a series of leadership changes at the unit, which has been tainted by food scandals, including a pork mislabeling issue last year that forced the company to temporarily shut a dozen stores in central China.
Foran, who joined Walmart in October after a long career with Australian retailer Woolworths Ltd (WOW.AX), replaces Ed Chan, who stepped down in October.
Some analysts questioned the wisdom of putting a relative newcomer at the helm of the China operations as Walmart takes on fierce competition from both local and other global rivals.
“The new appointee seems to have comparatively less China on-the-ground experience,” said James Roy, senior analyst at China Market Research Group based in Shanghai.
“I think for a lot of American companies and a lot of foreign companies, they need people from inside who know the company culture well, and it is important to have a balance between that and the operating environment in China,” he said.
“Whether it’s local Chinese or not, it should be somebody who understands the market.”
Foran is currently senior vice president, Walmart International, and starts his new role on March 1, the company said in a statement on Tuesday.
Before joining Walmart, Foran, a 30-year retail veteran, moved up the ranks in New Zealand and Australia at Woolworths, from a part-time job stocking shelves to head of Woolworths’ Supermarket Division.
He held several senior roles at Woolworths, including General Manager of Big W, the company’s discount department store division, and Dick Smith, which specializes in consumer electronics. His experience includes operations, merchandising, marketing and replenishment.
Foran quit Woolworths after missing out on the top job, the Sydney Morning Herald said in a report in July.
Walmart has not always had an easy time during the past 15 years as it has expanded across China, where it now has more than 350 stores.
In October, the Chinese city of Chongqing penalized Walmart after the firm was found to have mislabeled some pork as organic at a couple of its stores. Authorities said the pork scandal was the latest in a string of 21 violations dating back to 2006.
Walmart had also suffered a series of high-level personnel losses last year, after its China chief financial officer and chief operating officer left in May, leaving a leadership vacuum.
Walmart’s troubles in China reflect the retail giant’s struggles in a complex market where rapid expansion and a cumbersome takeover have marred profit and growth.
Walmart China has faced intense competition on the mainland, where it competes against China’s Sun Art (6808.HK) and China Resources Enterprise (0291.HK), with local brands such as Yonghui and Shinshiji, among others.
It is also up against French hypermarket chain Carrefour (CARR.PA), Britain’s Tesco (TSCO.L) and Germany’s Metro AG MEOG.DE - all of which are gradually expanding to inland China as interior cities become more affluent.
Foran could boost Walmart’s position in China if he taps those who have local expertise, some analysts said.
“The appointment itself is good in strengthening the management in purchasing and operation, but I still have a question on how effective it is if he didn’t know much about the (local) market,” said Jason Yuan, analyst at UOB Kay Hian Research in Shanghai.
Writing by Ken Wills; Editing by Kazunori Takada, Muralikumar Anantharaman and Ian Geoghegan