When cheaper is better

Keikichi Miyakawa says he earned about US$50,000 a month selling golf club memberships during Japan's bubble economy in the late 1980s.

Now on a pension, the 65-year-old Tokyo resident shops at Seiyu, the discount chain owned by Wal-Mart Stores Inc. He recently bought packs of bean sprouts for 29 yen (HK$2.80), and croquettes for 49 yen, sold as part of the store's Mainichi Kakaku Yasuku strategy. That's the Japanese translation of Wal-Mart's "every day low prices" slogan.

With Japan's economy on the cusp of a third recession since 2008 and household incomes falling for the last three years, the country's famously picky and brand-enamoured shoppers are in a bargain-hunting mood. Discount stores are gaining and Wal-Mart, after years of mixed results and a 20.9 billion-yen loss for Seiyu in 2007, is expanding for the first time since 2008.

Wal-Mart's Japan business saw net sales rise 2 per cent during the second quarter. Its Seiyu unit, which it has owned since 2008, will open seven new stores this year and three more next year. Wal-Mart's head of international business, Doug McMillon, has said the company will even consider acquisitions to increase its presence in Japan. Wal-Mart faces hurdles in other parts of Asia: In China it is adding fewer stores than previously planned, and its strategy in India has been hindered by regulations that until September banned foreign companies from investing in supermarkets.

Wal-Mart on Thursday reported that its investigation into violations of a United States federal antibribery law had extended beyond Mexico to China, India and Brazil, some of the retailer's most important markets.

The disclosure, made in a regulatory filing, suggests Wal-Mart has uncovered evidence into potential violations of the Foreign Corrupt Practices Act, as the fallout continues from a bribery scheme involving the opening of stores in Mexico.

The announcement underscores the degree to which Wal-Mart recognises that corruption may have infected its international operations, and reflects a growing alarm among the company's internal investigators.