Walmart’s story in China gets told two ways, and both versions are wrong on their own. One says the American retail giant failed in China, undone by local e-commerce and cheaper rivals. The other says Walmart cracked China through Sam’s Club and never looked back. Neither captures what actually happened, which is more useful to any foreign brand watching from outside: Walmart lost badly in one part of its business and won decisively in another, inside the same country, under the same management, at the same time.
That split matters more than a single verdict would. Walmart entered China in 1996 with its classic hypermarket format: big-box stores stacked with groceries, electronics and household goods, priced to compete on volume. For two decades this worked reasonably well. Then local convenience retail, community group-buying and platforms like Freshippo and Meituan changed how Chinese shoppers bought daily essentials, and Walmart’s hypermarkets started looking like the wrong answer to a question shoppers had stopped asking.
The numbers on the hypermarket side are stark. Walmart China’s store count, hypermarkets included, fell from around 412 in 2020 to roughly 278 by April 2026, a net loss of more than 130 stores in five years. In its 2026 fiscal year alone the company closed 151 traditional hypermarkets. According to Chinese business outlet Jiemian, Walmart plans to keep trimming the format down to around 250 large stores by 2027. This is not a rounding error or a routine portfolio tidy-up. It is a company admitting, store by store, that a format built for American suburbs and car-based weekly shopping trips does not map onto Chinese cities where residents shop daily, often on foot or by scooter, and expect delivery within the hour.
Set that against Sam’s Club, the membership warehouse chain Walmart also owns, and the picture flips. Sam’s Club now has more than sixty stores in China and, according to Jiemian’s reporting on Walmart’s fiscal 2026 results, contributed over 80 percent of Walmart China’s revenue on omnichannel sales above RMB 140 billion, with each store averaging more than RMB 2 billion a year. Tencent News reported that while competitors were shutting stores, Sam’s added eight new locations in the past twelve months and posted double-digit growth in transaction volume in its most recent quarter. A new Sam’s store is scheduled to open in Jinan by the end of 2026. This is not a business in retreat. It is Walmart’s fastest-growing and most profitable format anywhere in the world, and it happens to be running in a market where the company’s original format is being dismantled at the same time.
Why did membership warehouses succeed where hypermarkets struggled? The honest answer has less to do with clever localisation and more to do with matching a business model to a real gap in the market. Sam’s Club sells bulk quantities of imported and premium goods, curated rather than exhaustive, to an urban middle and upper-middle class that wants reliable quality, particularly in food, and is willing to pay an annual membership fee for it. Chinese consumers who distrust the provenance of some domestically distributed goods, or who simply want the imported cheese, wine or protein bars they cannot easily find elsewhere, have made Sam’s membership something close to a status marker in cities like Shanghai and Shenzhen. The Guancha Syndicate’s analysis of Walmart’s China business describes this as the company’s “Sam’s-ification” strategy: shrink the loss-making hypermarket estate, pour capital into the warehouse format, and let Sam’s effectively subsidise the group’s presence in China.
None of this means the hypermarket closures were a mistake to begin with, or that Walmart was slow to see the writing on the wall. Retail formats age unevenly across markets, and pretending otherwise wastes money. What is more interesting is what Walmart did not do: it did not treat the hypermarket’s decline as a verdict on China itself, and it did not walk away, in contrast to how Amazon eventually exited the Chinese e-commerce market after years of losing share to Tmall and JD.com. Walmart instead reallocated capital toward the part of its business that Chinese consumers actually wanted, plus a network of smaller-format neighbourhood stores and heavy investment in delivery infrastructure through its stake in JD.com. The company treated “failing in China” and “failing in this format in China” as two different problems, which they are.
For foreign brands watching this from the outside, the first lesson is straightforward but frequently ignored: a format, product line or positioning that works globally is not owed success in China simply because it works everywhere else. Walmart’s hypermarket model generated real profit for decades in the United States, Mexico and Central America. It did not automatically transfer. The Chinese retail environment rewards different things: proximity, delivery speed, curated selection, and increasingly, a credible story about product origin and quality. A brand that assumes its core format is portable is making a bet it has not actually tested.
The second lesson is less obvious and arguably more useful. Success in China can come from a part of your business you did not expect to lead. Sam’s Club was, for most of Walmart’s history, a secondary format compared with the flagship supercentres. In China it became the main event. Brands entering the market with a fixed idea of which product line or division should carry the expansion risk missing the one that actually resonates locally. This is one reason a scattershot single-platform approach rarely works as well as testing across formats and channels; the comparison between Tmall and JD.com as distribution routes is a similar exercise in figuring out, empirically, where a brand’s demand actually sits rather than assuming it in advance.
The third lesson is about patience with restructuring rather than patience with a fixed plan. Walmart has been closing hypermarkets in China since at least 2016, well before the pandemic accelerated the shift to online and quick-commerce grocery. That is roughly a decade of continuous format adjustment, not a single pivot. Foreign retailers entering China should expect their initial model to need real revision within a few years, not as a sign of failure but as a normal part of operating in a market that moves faster than most head offices are built to track.
What Walmart’s experience ultimately shows is that “complicated” is usually the more accurate word than “failed” or “succeeded” when a large foreign company has been in China for thirty years. Different divisions, different cities and different consumer segments respond to different offers. A brand willing to look closely enough to see which part of its business China actually wants, rather than which part performs best at home, has a real chance of finding its own version of Sam’s Club.
Sources: Jiemian, “沃尔玛在华一个季度掘金51亿美元 其山姆会员店新增6家，济南店2026年底开业” (m.jiemian.com/article/12417906.html); Guancha, “沃尔玛中国的双面：山姆狂奔藏隐忧，超市转型谋新路” (guancha.cn/economy/2025_11_25_798176.shtml); Tencent News, “对手都在关店，沃尔玛为什么还能打？” (news.qq.com/rain/a/20260525A0283800); South China Morning Post, “Walmart’s Sam’s Club cracks China market formula even as foreign retailers shut shop” (scmp.com); China Daily, “Walmart pivots to neighborhood stores as hypermarkets fade” (global.chinadaily.com.cn).
Harry Huang is the founder of Ecommerce China Agency. He has spent the past decade helping foreign retail and consumer brands work out which part of the Chinese market actually wants them, rather than which part they assumed would. He has watched more than one client try to import a format that worked at home wholesale into China, only to find the winning move was somewhere else in their catalogue entirely. If you are trying to figure out where your brand’s real opening in China is, get in touch with our team and we will walk through it with you.
