One door closes, another opens. That's one way of describing the China operations of US-based Wal-Mart Stores Inc, these days.

The world's largest retailer is aggressively revamping its strategy in the nation that is key to its international ambitions to emphasize quality and safety after Chinese consumers gave its famed low prices the cold shoulder. Even as Arkansas-based Wal-Mart plans to open 110 new stores by 2016 -- announcing 28 "supercenter" openings and two big-box Sam's Club openings on Tuesday alone - it shuttered 29 stores in China last year.

"We are optimizing our operations in China," Sean Clarke, tapped as Wal-Mart's new China CEO last month in a management shuffle, said in a statement released to China Daily. Emphasizing the importance of "long-term investment" and "steady and quality growth" in China, he said the retailer would invest in more stores, increase efficiency to lower costs, strive to beat the competition's prices while "ensuring product safety and quality", and help customers save money "so they can live better". The company also is putting money into a build-out of its logistics network to improve "quality assurance and food safety" while reducing costs following a scandal earlier this year over tainted donkey meat.

"We are adapting to the market by transforming and upgrading our business, which is essential to our long term development in China," said Clarke, who will take over as China CEO on June 1 when current China CEO Greg Foran becomes Asia CEO.

Despite its 17 year presence in China, where it had opened about 400 stores on the Chinese mainland, Wal-Mart has struggled to click with Chinese consumers who put food safety over low prices. Reflecting its China challenges, sales at its international division in 2013 rose just 1.3 percent.

Analysts blame the company's problems on its failure to understand the thinking of its key Chinese customer.

In China, Walter Loeb wrote in Forbes.com, "large stores are looked upon as being expensive - since it is the smaller neighborhood stores that are viewed as offering lower prices since the customer believes their expenses are lower". Food is generally not bought in bulk in China "because customers feel that they can find fresher items in smaller stores and in small quantities", Loeb wrote. "Wal-Mart has to convince their potential customers of the quality and freshness of the food, and that the general merchandise offered is of high quality despite its low price."

James Roy of Shanghai-based China Market Research said Chinese consumers turn to large foreign brands for reliability and quality but receive "mixed messages" from Wal-Mart because the company emphasizes "every-day low prices" - seen by typical Chinese shoppers as "cheap and not very safe".

But Wal-Mart has its problems in its home market, too. The company's sluggish US financial results in the latest quarter underscored the difficulties of its key lower-income customer in a slow, uneven US economic recovery. Cuts to the US federal food-stamp program also played a role in causing first-quarter sales to rise just 0.8 percent from a year earlier as profit dropped 5 percent amid a 1.4 percent drop in US store traffic. The company also offered a weaker than expected outlook for second-quarter earnings.

Turning to its international operations and China in particular, Wal-Mart in October announced a three-year revamping of its China plan that included opening up to 110 supercenters and Sam's Clubs in two years, creating 19,000 jobs, and closing unprofitable stores throughout the country. In the most recent closings, in March, it shuttered stumbling stores in Chongqing municipality, Yancheng, Jiangsu, Changde, Hunan, and Ma'anshan, Anhui. On Tuesday it announced the opening of supercenters in first- and second-tier cities such as Shanghai, Changchun of Jilin Province, Wuhan of Hubei, as well as in third- and fourth-tier cities including Fuyang of Zhejiang Province and Xingtai of Hebei.

Clarke said the superstore openings would allow the company to "better serve emerging groups of customers created by the country's urbanization".

The company also announced the opening of one Sam's Club outlet each in Wuhan and Changzhou, Jiangsu.

China's burgeoning middle-income and upper-income consumers "are well-suited" for the high-end Sam's Club membership format, Clarke said, ensuring "strong" growth of the brand for "years to come".

The October plan also calls for spending about $93 million to remodel more than 55 stores this year, up from 31 in 2012 and 45 last year, to "enhance customers' shopping experience and improve in-store productivity".

michaelbarris@chinadailyusa.com

(China Daily USA 05/22/2014 page3)