Beijing, Feb 25 - Wal-Mart Stores Inc expects improved productivity will help offset inflationary pressures in China, where it sources many of its products, Vice Chairman Mike Duke said on Monday.
Wal-Mart buys $9 billion in directly sourced products from China, Duke told reporters in Beijing, adding it was too difficult to even estimate the amount of indirectly sourced goods it buys.
China, which makes many of the clothes, toys and other products sold by Wal-Mart worldwide, has seen inflation surge to its highest levels in 11 years.
But Duke, who oversees the U.S. retail giant's international operations, said productivity gains at China's increasingly sophisticated manufacturers would help counter price pressures, and China would remain a major supplier even if some of its manufacturing shifted elsewhere.
"There may be certain categories of product that may be decreasing from China, but there are other categories of products that are increasing from China," he said.
"Their use of technology to produce quality product in a more efficient way, in a more responsible way, is taking place."
Wal-Mart has been working to improve sales at its U.S. stores after efforts in 2006 to downplay its discount roots and stock trendy clothes and home goods backfired with its shoppers, who were looking for basic merchandise.
Duke, who in January also assumed control of Wal-Mart's procurement operations, said the company's focus on holding prices low would now be a boon as the United States and other markets face slower overall growth and increasingly budget conscious customers.
"Right now in many of the markets of the world, particularly the mature markets, the consumer is under a lot of pressure" from oil and food price rises, he said. "With the way we do business, we are perfectly positioned for this time."
Wal-Mart last week unveiled strong growth in its operations in 15 countries outside the United States. It is increasingly turning to its international operations to impress investors as its U.S. business struggles with limited growth at its near-4,100 stores.
In China, Wal-Mart's full-year sales significantly outpaced French rival Carrefour, Duke said last week.
He said his next stop would be Japan, where Wal-Mart's local unit, Seiyu Ltd, recently announced it likely lost twice as much money in 2007 as previously forecast due to slumping sales and asset write-downs.
Wal-Mart's plan to acquire full ownership of Seiyu was "completely on track" and would enable the company to develop more quickly in Japan's fragmented retail sector, Duke said.
"We do believe we have not moved fast enough to implement the kind of value proposition that the customer wants in Japan," he said.