Walmart faces controversy in China
Steve Chiotakis: To China now, where two top executives at Walmart have stepped down, including the CEO of Walmart China. The resignations come a week after authorities in one Chinese city closed several stores for food labeling violations.
Marketplace’s China bureau chief Rob Schmitz reports, reaction is mixed over there on whether Walmart deserved the punishment, or whether the government is unfairly targeting the retailer.
Rob Schmitz: The city of Chongqing — population 32 million — has 13 Walmart stores. Every one of them was shut down for mislabeling pork as “organic.”
Political analysts called the crackdown politically motivated. Chongqing’s party chief will likely be promoted to China’s top leadership next year, and attacking a foreign company usually garners public support in China. Business analysts disagree.
Shaun Rein: China’s been arresting both executives of Chinese companies, as well as foreign companies, so this is not just a foreign attack.
Shaun Rein is the author of the book “The End of Cheap China.”
Rein says Walmart’s been sloppy in China. Its biggest mistake, he says, is the company hasn’t changed its strategy for China. Walmart recently reported a quarterly loss at its 350 stores there.
Rein: Western brands cannot compete with Chinese companies on price. It doesn’t work. Chinese companies will always be able to be cheaper.
Analysts in China say Walmart should switch gears and focus on wealthy consumers. With two top positions in China now vacant, now might be the time to do that.
In Shanghai, I’m Rob Schmitz, for Marketplace.
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