Roughly the size of the continental U.S., China still doesn't have a nationwide logistics network of trucks, highways and warehouses that can efficiently deliver supplies from farm to shop shelf, said the paper.
Local tastes -- in a country with over half a dozen major dialect groups and climates ranging from tropical to subarctic -- are extremely diverse, making it hard to stock shelves in large quantities. In the northeastern province of Shandong, for example, the top carbonated soft drink isn't Coke or Pepsi. It's a local brand called Laoshan.
Half of every dollar spent on food in China goes to live and fresh products, according to Merrill Lynch & Co. Inc. estimates. "So it's very difficult to run a national chain and get efficiencies," says Merrill analyst Denise Chai, "What Wal-Mart is buying is a footprint. They're not trying to buy a brand or operations; they're just getting a footprint really fast."
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