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20 pairs of socks for $11.98. Is it worth it?

From MarketWatch: (emphasis added)

Seeking to lower costs in an increasingly competitive landscape and answering to the demands of retailers such as No. 1 discounter Wal-Mart Stores Inc., U.S. apparel companies from denim maker Levi Strauss & Co. to VF Corp., maker of Wrangler jeans, have moved their production in the past decade overseas to Asia and Latin America, analysts said.

From the Gaston Gazette in North Carolina, where Hanes is laying of 1,400 workers:

Gastonia resident Patrice Fredell showed up for the first shift at the Hanesbrands Inc. plant Wednesday morning like she has for 19 years, but this time she found the plant closed..."We were going full blast for a long time and then all of the sudden,” Fredell said as she walked into the plant’s main office to get unemployment paperwork Wednesday. “One of my friends just started crying ... It’s going to hurt a lot of people.”

From Al Norman:

The sudden announcement caught Eden City Manager Brad Corcoran by surprise. “I have no idea what’s going on” Corcoran told the Winston-Salem Journal. “There was no courtesy call, no e-mail, no nothing. Obviously that wasn’t a concern for them.”...Despite all these closings, Hanesbrands will not have ‘migrated’ completely. The company will still have close to 10,000 jobs left in America, scattered across 11 plants. So there is some work still left for Wal-Mart to do.

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According to Chinese media, Wal-Mart’s latest international failure might be Wal-Mart China - which, within its 12 years in China, has failed to become profitable.  One article notes that Wal-Mart’s “market share has retreated in defeat” and that Wal-Mart’s lofty sales goals are extremely “distant” figures.

Even according to data from China’s Department of Trade Wal-Mart’s rank within the retail sector has dropped from 17th in 2003 to 20th in 2004—and in 2005, Wal-Mart dropped again to an astonishingly low 30th.

To analysts, Wal-Mart China’s financial failures may be a significant factor in why Wal-Mart decided to abandon its Wal-Mart Asia headquarters in mainland China.  However, Wal-Mart Asia chairman and CEO Vicente Trius makes clear that China remains important to Wal-Mart’s global purchasing.  At the same time, though, Trius also states that locating the Asia headquarters in Hong Kong will preserve the “independent nature” of the Chinese operations—perhaps a hint that Wal-Mart wants to isolate the damage.

At any rate, it looks like Wal-Mart China has interesting times ahead of it.  See both articles below for more details.

No Opportunity for a Wal-Mart Asia Headquarters in Shenzhen [Finance and Economics]

Wal-Mart, who entered China 12 years ago and still has not made a profit, announced on September 3 that it will establish its Asia headquarters in Hong Kong.  Before this, it was widely spread that Shenzhen, Wal-Mart China’s headquarters and Wal-Mart Global Procurement Center, would be Wal-Mart Asia’s headquarters.

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An article today from Reuters brings news that Wal-Mart is looking to expand its presence in Southeast Asia. Wal-Mart has come to rely more and more on its international stores for sales growth, and expanding into Southeast Asia is only one part of the company’s international expansion plan. From Reuters via the International Herald Tribune:

Wal-Mart Stores, the world’s biggest retailer, is considering its first stores in Southeast Asia and expects to approach 10 percent growth in international sales to $100 billion this fiscal year despite a global economic slowdown.

This is not, however, Wal-Mart’s first venture in Southeast Asia. The company’s first effort in the region was a partnership with Indonesia’s powerful Lippo Group. In 1995, Wal-Mart and Lippo worked together to open stores in Jakarta. As the New York Times reported:

The 180,000-square-foot Wal-Mart Supercenter, planned for Lippo Village, a Jakarta mall owned by the Lippo Group, will be the first in Indonesia. Wal-Mart, which is based here, said it would provide expertise and management services for the store, which Lippo will own. By the time the store opens, Wal-Mart will have stores in Indonesia, Hong Kong and China, company officials said.

The partnership failed. Less than three years later, after opening two stores in Jakarta, Wal-Mart announced that it was abandoning the project. From BusinessWeek:

Wal-Mart Stores Inc. confirmed on Wednesday, Feb. 25, that it’s trying to end a franchise agreement with a unit of Indonesia’s powerful Lippo Group. The partners operate two stores in Jakarta under the Wal-Mart banner. About 13 U.S. expatriates, who supported the store operations, have left Indonesia, a Wal-Mart spokesman says.

Even before the Lippo debacle, Wal-Mart partnered with Thai company Charown Pokphand Group. That partnership was also a failure, and ended after less than a year. Will Wal-Mart’s most recent efforts to build in Southeast Asia prove different than its previous attempts?

Wal-Mart sees potential growth in Southeast Asia [Reuters via International Herald Tribune]

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…in China that is.  The Chinese labor union won yet another fight against Wal-Mart today, successfully negotiating for an 8% raise for 2008 and 2009 as well setting terms for paid vacation, social security, and overtime.

This successful employee wage and benefit negotiation follows the recent unionization of Wal-Mart China’s purchasing system - which Wal-Mart brought upon themselves after illegally laying off workers.

Wal-Mart China’s retail units were unionized in July 2006 after the All China Federation of Trade Unions, in cooperation with the Service Employees International Union, resorted to western-style union tactics.

For more on Wal-Mart China’s unionization history, view our fact sheet:  Breaking from Tradition:  The Unionization of Wal-Mart China. 

Wal-Mart signs collective labor contract with employees [Xinhua]

Employees of a Wal-Mart outlet in northeast China signed a collective contract with the retailing giant late Monday night, the first among Wal-Mart’s 100-odd stores across China.

After talks lasting more than five hours, the Wal-Mart outlet in Shenyang, capital of Liaoning Province, agreed on a proposal by its trade union to raise employees’ salary by an annual rate of 8 percent in 2008 and 2009, according to the city’s trade union.

Other agreements included the standard of minimum salary, paid vacation, social security treatment and payment for overworking.

The proposal was raised by the trade union of Wal-Mart Shenyang on May 28 according to Chinese law, and Wal-Mart agreed to launch negotiations on July 4 after being authorized by its headquarters.

Ju Xiuli, chairman of Shenyang City Trade Union, praised the contract, saying it reflected Wal-Mart’s commitment in fulfilling social responsibilities and its sincerity while implementing China’s law of labor and contract.

Also see the article in Chinese. [China News]

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Wal-Mart to Construct 5,000 ‘Ordinary Convenience’ Stores [Beijing Times via People Net]

On the heels of Carrefour’s announcement to increase investment in Sichuan’s earthquake disaster zone, Wal-Mart China vice chair Xiang Guorong announced that Wal-Mart will build 5,000 ‘ordinary convenience’ stores.  Xiang expressed that the stores are merely for the disaster zone’s immediate needs – the objective of the stores is not to seek profit. 

Therefore, Wal-Mart will not list these stores on their website; rather the stores will probably be demolished after reconstruction efforts are completed. 

Moreover, when Wal-Mart’s first store (not an ‘ordinary convenience’ store) to open after the catastrophe was a Trust-Mart store on June 27.

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Beware, developing world:  Wal-Mart is on the prowl.  After years of exploiting the Chinese workforce and importing billions and billions of Chinese goods to the U.S., it looks like the codependent relationship is on the brink.  According to the Wall Street Journal, suppliers which once relied on Wal-Mart’s demand for cheap goods are slowing production and some are even closing their doors. 

While the growth of China’s economy has increased workers’ rights, albeit mildly, and appreciated the value of China’s currency, these factors have also increased the costs of doing business in China.  So even though Wal-Mart has worked extensively to develop trade pathways and relationships in China – and is continuing, to some extent, to develop these pathways (even building a new distribution center in Jiaxing), it seems Wal-Mart is searching for an even more exploitable, expendable population to fill its shelves with products that supposedly help its consumers ‘save money’ and ‘live better’. 

But where will Wal-Mart go?  Wal-Mart won’t comment.  So beware.

China’s Export Machine Threatened by Rising Costs [Wall Street Journal]

As a sign over its main boulevard proclaims, Honghe is “China’s Famous Town for Sweaters.” But the economy of sweater town is unraveling, providing an early sign that China’s manufacturing sector may be entering middle age.

Over the past two decades, this city about 90 minutes’ drive from Shanghai built a comfortable niche in the global economy. At the industry’s height in recent years, more than half of Honghe’s 100,000 residents worked in 100 factories and 8,000 shops that knitted, dyed, packaged and shipped some 200 million sweaters a year. The local government says the enterprises brought in $650 million a year in revenue.

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A great new seafood sustainability report was released today by Greenpeace. Titled “Carting Away The Oceans: How Grocery Stores Are Emptying The Seas,” the report comprehensively profiles and grades 20 American grocery chains on their seafood buying and selling practices. Surprisingly, Wal-Mart came in 5th in the rankings - but nonetheless earned a failing grade.

Seafood has been an area where Wal-Mart has made considerable efforts to appear sustainable - or at least heading in that direction. The company announced recently that within the next few years it would work towards 100 percent sustainable seafood in partnership with Conservation International, World Wildlife Fund (WWF), and the Marine Stewardship Council (MSC). In 2006 Wal-Mart began selling MSC certified seafood, and currently offers 22 MSC certified products.

But Wal-Mart’s got a long way to go. Greenpeace finds that the company still sells 14 unsustainable “Red List” species: Alaskan pollock, Atlantic cod, Atlantic halibut, Atlantic salmon, Atlantic sea scallops, Chilean sea bass, grouper, hoki, red snapper, redfish, orange roughy, South Atlantic albacore tuna, tropical shrimp and yellowfin tuna.  And it’s been less than two months since we were all reminded that sustainability goes far beyond just the environment , when “virtual slavery” among workers was exposed at Wal-Mart’s shrimp suppliers in Thailand and Bangladesh.

Wal-Mart’s efforts to sell sustainable seafood should applauded, but it is entirely within the company’s power to stop buying unsustainable seafood sooner rather than later. 

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Wal-Mart’s fierce opposition to unionization is no match for the Chinese government.  In 2001, the Chinese union began an intensive campaign to unionize Wal-Mart China’s retail division.  Over the course of five years, the union’s public criticism of Wal-Mart and its groundbreaking grassroots organizing efforts succeeded in the establishment of retail unions across the country.  Wal-Mart China’s global procurement system, however, remained unorganized.  At least until Wal-Mart put itself in the spotlight for illegally laying off its workforce, that is.  After that, a new campaign was waged and Wal-Mart’s purchasing system employees are now unionized.

Maybe the union will reach out to these workers next.

For more on Wal-Mart China’s unionization history, click here.

Wal-Mart’s Shanghai Purchasing Center Establishes a Labor Union [East Day]

At the end of last year, Wal-Mart’s Shanghai global purchasing center caused a disturbance when it laid off employees.  It’s refusal to establish a trade union triggered all sorts of problems.  At all levels, the labor union waged an unremitting effort.  A few days ago, Wal-Mart finally established a trade union.

Labor Union Problems

In October 2007, when Wal-Mart laid off employees, there was a relatively negative effect.  Because the workers weren’t represented by a labor union, there was a shortage of effective communication channels between workers and the company.  This caused the national labor union issue significant criticism.

After the incident was settled, the Changning district labor union contacted Wal-Mart for the first time.  Wal-Mart insisted that the company was able to satisfy the well-being of its employees and refused to establish a labor union.  The Changning union then started to disseminate labor propaganda which focused on the socialist characteristics of the Chinese union and how it differs with western unions.

In repeated communications with Wal-Mart, Wal-Mart repeatedly treated the creation of a union as problematic and was not in favor of it.

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Today, the Financial Times reported that Wal-Mart is expanding its overseas expansion. Well color me surprised! Currently, international sales constitute 26% of the company’s net sales and this is while Wal-Mart is lowering its capital expenditures. In layman’s terms, this means that they’re slowing growth- or rather, they are being forced to by the market. So in order to sustain the company, Wal-Mart is looking to conquer new markets abroad. Thankfully, Asia and Eastern Europe are still up for grabs! 

Wal-Mart readies for overseas expansion

Wal-Mart, the world’s largest retailer, is embarking on a further round of international expansion on the back of a systematic overhaul of the way it runs its business, which is expected to deliver more than $100bn in sales this year.

The retailer is actively exploring a first move into Russia and neighbouring countries, while preparing to open its first wholesale warehouse stores in India next year in a joint venture with Bharti Enterprises.

Wal-Mart already has operations in 13 countries, which accounted for 26 per cent of its net sales last year.

Wal-Mart’s international square footage growth rate is now above that in the US, where it has now slowed the expansion of its profitable Supercenter format in the face of market saturation.

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A Q&A session with the head of India FDI Watch, Dharmendra Kumar, about the successes of the campaign and the many obstacles they have faced along the way.

How did India FDI Watch first begin?

The India FDI Watch Campaign started in March of 2005 with the mission to prevent the opening of Foreign Direct Investment (FDI) in the retail sector in India. However, during the course of the past three years as large domestic corporations, like Reliance, have also entered the retail sector, the India FDI Watch Campaign has broadened its scope to address the rise of corporate retail in general. 

Specifically, the campaign seeks to prevent the insertion of multi-national retailers from entering the Indian market, and stunt the growth of domestic retailers, unless these companies make satisfactory guarantees that would protect communities; protect the environment; insure the livelihoods of existing small retailers, hawkers and farmers; guarantee fair wages and working conditions for their own employees and source employees along with union protection and agreements; and insure that a significant percentage of sourcing derives from the Indian market. 

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Competition in China’s global marketplace is heating up even more.  With South Korean Lotte entering the Chinese market through the acquisition of CTA Makro, Wal-Mart and Carrefour will face even greater pressure to distinguish themselves and appeal to Chinese customers.

Unfortunately for Wal-Mart, which has faced an unusual amount of brutally honest attention in Chinese media, and Carrefour, which has gained an infamy for being French, Lotte could be poised for success.  In addition to Lotte’s proposed growth of 300 stores over the next ten years (Wal-Mart and Carrefour both managed about 100 stores in their initial ten years), Lotte has previous experience in China selling food products.

More from Reuters:

Lotte to open 300 stores in China in 10 years

SHANGHAI, June 11 (Reuters) - Lotte Shopping Co (023530.KS: Quote, Profile, Research), South Korea’s biggest department store operator, said on Wednesday it plans to open 300 hypermarkets in China in the next decade, as it competes for market share with Wal-Mart (WMT.N: Quote, Profile, Research) and Carrefour (CARR.PA: Quote, Profile, Research) in the world’s fastest-growing major economy.

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”The China Price,” a new book by Alexandra Harney, gets reviewed today by the Wall Street Journal. Though the book focuses on China, specifically, its broader message is about rock-bottom-cost manufacturing and the price we all pay for such practices.

Wal-Mart gets singled out as one of the worst perpetrators of this inhumane business model. Harney criticizes the company’s code of ethics for suppliers - the company’s usual defense on questions of supplier factory conditions. The loose wording and irregular enforcement of the code of ethics means little is done to ensure fair working conditions in factories. Perhaps even more heartbreaking, the company’s executives admit they don’t know if shoppers would prefer goods made in fair labor conditions. How is this not a major part of Wal-Mart’s sustainability project? Has Wal-Mart not even CONSIDERED sourcing fairly? From the Wall Street Journal’s review:

One character that doesn’t fare too well in the book is the ubiquitous American retailer Wal-Mart. While Harney acknowledges that the problems faced by Wal-Mart are endemic to the whole China-outsourcing model, the company turns up often in the pages of “The China Price.” We meet the owner of a Wal-Mart supplier who relies on the ruses of false records, coached employees and invisible “shadow factories” to maintain his business with the retailer. Harney describes Wal-Mart’s code of conduct for suppliers as “loosely worded and limited in scope,” and she interviews two former compliance auditors who admit that it’s practically impossible to find a fully compliant factory. The author also secretly visits what she terms Wal-Mart’s “summer school for bad factories,” mandatory training for suppliers who have received warnings about their labor practices, where it seems that few students have a clue as to what’s being asked of them. (At the end of a morning lesson, fewer than 50% of students are able to correctly answer half the questions on a remedial test.)

Asked about the practice of subcontracting to shadow factories and other behavior that presents the illusion of compliance by suppliers, Beth Keck, Wal-Mart’s director of international corporate affairs, tells Harney that it’s up to the Chinese factories to decline orders that they can’t meet under Wal-Mart’s standards. “They’ve got a choice there,” she says. Both Keck and Rajan Kamalanathan, the vice president for ethical standards, acknowledge that the company doesn’t know whether customers would be willing to pay more for goods made in factories that comply more with Wal-Mart’s standards.

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This June marks the end of the free plastic bag in China.  Wal-Mart’s China supercenters have greeted the measure with a more than enthusiastic response.  Various stores have given away promotional reusable bags, have hung information and instructional signage, and will start charging approximately 3 US cents for plastic bags.  Furthermore, the China Daily reports that Wal-Mart has set up “green channels for shoppers carrying their own bags.”

Even though the discontinuation of the free plastic bag is being mandated by the Chinese government, Wal-Mart appears to have done well in preparing for the changes.  And the effort could have an incredible effect:  According to the Chinese National Development and Reform Commission (NDRC), “at least 1,300 tons of oil is needed to make the bags given out by [Chinese] supermarkets alone every day.”

As the world’s largest retailer, Wal-Mart is uniquely situated to promote such changes in the U.S. as well.  And it should.  Assuming each of Wal-Mart’s 127 million U.S. customers a week receives just one plastic bag from Wal-Mart, a conservative estimate of the total yearly cost of plastic bags is over $134 million (calculated using the production costs of plastic bags in China – shipping and/or producing elsewhere could raise the cost for U.S. plastic bags considerably). Discontinuing the use of plastic bags would save the corporation money – the savings of which could be passed along to consumers. 

So what’s Wal-Mart waiting for?

The greatest possible concern would probably be customer backlash.  To overcome this, Wal-Mart could launch a compelling ad campaign about its doing even more to help consumers “save money” and “live better” while leveraging its sustainability efforts.  Wal-Mart could also employ its weighty lobbying arm to support a national movement.  Or, if consumers really do prefer plastic, Wal-Mart could simply ignore this preference as they have consumer preference for good customer service, safe products, and high quality.

For more on the change in China, see the China Daily.

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Wal-Mart spends millions of dollars each year on public relations hoping to counteract the negative impact the company’s business practices have on its reputation. In the process, Wal-Mart’s representatives misrepresent the company, even lying to protect its fragile reputation. In this series, we’ll be examining some of the most common lies the company tells - and truth behind the spin.

Lie #4: Wal-Mart Buys Locally
“We cannot continue to be a solvent nation as long as we pursue this current accelerating direction. Our company is firmly committed to the philosophy by buying everything possible from suppliers who manufacture their products in the United States” [Sam Walton, Wal-Mart Press Release, 3/13/85]

“Today we instruct buyers to make trips to places like Greenville, South Carolina; Dothan, Alabama...before just routinely dashing off a letter of credit to the Far East.” [Sam Walton: Made in America, 308]

“With this approach, we estimate we have saved or created almost 100,000 American manufacturing jobs...Every job we save creates another potential Wal-Mart customer who’s not worrying about where his or her next dollar is coming from.” [Sam Walton: Made in America, 310]

The Truth:
Wal-Mart is China’s sixth largest export market. In 2006, Wal-Mart imported $27 billion of Chinese goods.  Wal-Mart’s imports are responsible for 11% of the growth of the total U.S. trade deficit with China between 2001 and 2006. [Time, 6/19/05; EPI Issue Brief #235, 6/27/07]

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This video is part of a project launched by MTV with several celebrity spokespeople and bands, all working to raise awareness of human trafficking and worldwide labor abuses. The video, called “All I Need,” will make anyone think twice about the objects around us and the conditions they were made in.

Wal-Mart’s low prices are tempting. But the retailer depends on working conditions like this to remain profitable. By forcing suppliers to strip expenses to the bone, Wal-Mart enables an economy of sweatshop labor and human rights violations. 

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Wal-Mart may turn a blind eye to labor violations in their supplier factories, but what about violations in their supercenters?  The following article details workers at a Wal-Mart in Jinling, China who labor 365 days a year without a single day off.  The workers risk severe reprimand for taking days off or complaining about their arduous schedules.  Wal-Mart claims the workers aren’t Wal-Mart’s responsibility, but if even if that’s true, how could Wal-Mart just sit by and allow the exploitation of workers on their property? Perhaps such a situation is not too surprising, though, given Wal-Mart’s history of labor abuses and outright disrespect for labor laws.  What’s next, Wal-Mart?  Maybe locking employees in?

Wal-Mart Sales Promotion Employees Work Everyday, 365 Days! [Jinling Evening Paper via Nanjing News, 5/22/08]

The other day, a Wal-Mart food department factory representative from Wal-Mart’s Xin Street Supermarket complained to a Jinling Evening Paper reporter:  From the time she entered Wal-Mart until now, she has scarcely had any rest.  One year, 365 days, she has worked everyday.  Not only are there sales promotion employees like her in other departments working like she does, some who cannot stand these conditions have taken personal days off only to be severely reprimanded the next day.

“Our work time is from 7:30 in the morning to 3 in the afternoon; or from 3pm until 10:30 in the evening.  After work, we still have to attend a meeting until 11pm.  Many of us sales promotion employees live comparatively far away.  We arrive home very late at night,” this sales promotion employee informed reporters.

“Sales promotion employees are in fact factory staff and have work relations with the factory which simply dispatches the workers to Wal-Mart for work.  Factory personnel told us workers that sales promotion employees have one day off a week.  However, in the supermarket, supermarket manager, Zhang Mou, won’t permit workers to rest.  He said once you enter Wal-Mart, you must listen to Wal-Mart, if not, go home.  If the factory intercedes, Wal-Mart will remove their goods.  Before, many of us sales promotion employees worked at Carrefour, Jin Runfa (RT Mart), etc.  All these supermarkets give the regular time off unlike Wal-Mart where we are the lowest employees.  Where we eat, the hot food is all separate.  Wal-Mart’s staff has two days off every week.  We sale promotion employees don’t have a single day off.  We stand every day for eight hours.  Our legs are swollen.  We’ve made known our circumstances to the store’s sales promotion department.  The staff has recorded our state of affairs, but nothing has changed.” Sales promotion employees seem to have no options.

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Just because something is legal or legitimate, does not mean that is right. The best example of this is Wal-Mart’s backdoor entry into India by virtue of its JV with Bharti Retail. For those who believe that Wal-Mart is solely interested in wholesale retail are completely oblivious to the company’s expansionist tendencies across the world. Contrary to their statement in this article, Wal-Mart is in a JV and pursuing cash-and-carry out of compulsion not choice. If Indian FDI laws were more flexible, Wal-Mart would set its sights to conquer the surging Indian retail market same as it did in Mexico or Central America. 
Let’s not kid ourselves: Wal-Mart is doing wholesale in India because they have to. And really, they probably won’t be doing much business with kirana owners like they claim they will. As the director of India FDI Watch said: “Here Wal-Mart is coming as a wholesaler, and Wal-Mart is only selling to Bharti.” There is nothing in it for the small vendors or farmers.

Cash-and-carry: the Wal-Mart way [India Business Law Journal]

Like it or not, Wal-Mart is coming to India. But the retail giant won’t be setting up the air-conditioned, consumer friendly superstores visible in so many other countries. Instead, in order to comply with Indian laws, Wal-Mart is establishing with Bharti Enterprises a business-to-business wholesale retailing company called Bharti Wal-Mart. The venture is a 50-50 joint venture between the two companies, though Indian law would have allowed Wal-Mart 100% FDI in such a back-end business.

“It is a joint venture out of choice, not compulsion,” a Wal-Mart spokesman tells India Business Law Journal. “We recognize the importance of having a local partner based on our excellent experiences working with partners around the world in places like Mexico, Central America and China.”

“Bharti is a great company,” the spokesman continues, “with a strong understanding of the market in India, and makes for a winning partnership.”

Wal-Mart sees the potential for its wholesale cashand-carry business in India as immense, and is eyeing the country’s 12 million neighbourhood shops – 90% of which the company says are not directly served by fast moving consumer goods companies – as its customers.

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Bharti Retail aims to consolidate presence in northern India [Economic Times]

Bharti Retail, a recent entrant in the organised retail market, on Tuesday said before launching pan-India operations, it will focus on Punjab and then move on to consolidate its position in northern India.

“Our focus right now is Punjab and we will first consolidate our presence in North India,” Bharti Retail President and CEO Vinod Sawhney told reporters on the sidelines of a CII organised retail conference.

The company has recently announced the launched of its first three food and grocery stores under the brand name ‘Easy Days’ in Ludhiana, Punjab.

Easy Day is a neighbourhood format store, which has been launched first. The company also plans to have bigger formats like compact medium and hypermarkets.

Asked when the other formats were expected to be rolled out, Sawhney said, the company was at present learning from the experiences of the new stores and was thus concentrating on smaller formats.

Easy Day stores offer a wide range of products ranging from items for daily usage such as personal care products to groceries such as processed foods, staples, bakery, dairy products, meat and poultry.

Sawhney said the company would also focus on private labels at the stores. “As somebody who is entering the retail market we will be looking at private labels also,” he said.

The company, which has a JV with Wal-Mart for cash-and- carry operations and a franchisee agreement for front-end retail, aims to spend USD 2.5 billion by 2015 for opening multiple format stores.

The company is expected to open its first cash-and-carry stores by the end of 2008.

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This article was originally published on Dirt Diggers Digest.

Wal-Mart Stores has put out a press release patting itself on the back for promising the equivalent of about $430,000 for disaster relief and reconstruction for the area of China hit by a massive earthquake this week. The gesture was laudable but the amount was less than impressive.

After all, the giant retailer would be nowhere today without the countless Chinese workers who toil in sweatshops so that American consumers can be offered the cheap goods that are at the core of the company’s business model. Last year those largely Chinese-made goods brought Wal-Mart profits of $12.7 billion, or about $1.4 million every hour of every day. The $430,000 contribution thus represents less than 20 minutes of profit.

Wal-Mart also profits from Chinese consumers. The company operates more than 200 stores in China (through joint ventures and minority-owned subsidiaries), several of which have been shut down because of the tremblor. Wal-Mart was so eager to operate stores in China that it agreed to let its employees there be represented by unions (though of the government-dominated variety).

Wal-Mart has a history of using relatively inexpensive amounts of disaster relief to boost its reputation. After Hurricane Katrina hit the U.S. Gulf Coast in 2005, Wal-Mart maneuvered to get maximum exposure for its prompt delivery of relief supplies. A fairly routine operation for a company possessing the most advanced logistics infrastructure was seen as nearly miraculous, given the ineptitude of federal and state public officials.

The company made an initial faux pas (quickly reversed) in announcing that employees at its stores shut down by the storm would be paid for only three days. It also started out offering a measly $2 million in relief but soon overcame its parsimonious instincts and upped the figure by $15 million, thereby winning wide praise. The wave of favorable coverage went on for several months, thanks at least in part to the efforts of its army of p.r. operatives from Edelman and a conservative blogger who was paid to tout Wal-Mart’s hurricane work in the blogosphere.

Wal-Mart may have to part with more than $430,000 to get a similar public relations bonanza from China’s suffering.

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This is the third in a series of posts on Wal-Mart’s 2008 shareholder resolutions. The full list of resolutions - and Wal-Mart’s statements regarding them - can be found in the company’s 2008 proxy here (PDF).

Resolution #7 on this year’s proxy proposes the establishment of a human rights committee at Wal-Mart. Below, the details of the proposition, why Wal-Mart’s shareholders would benefit and how the company has reacted to the proposal.

Wal-Mart’s Public Image Problem
Reports of human rights violations have dogged Wal-Mart for years - particularly in the company’s supplier factories, most of which are overseas. These violations have thoroughly damaged Wal-Mart’s reputation, with everyone from U.S Senators to Wal-Mart employees to factory workers themselves speaking out about the inhumane conditions in Wal-Mart’s supplier factories. Bama Athreya, director of the International Labor Rights Forum, testified before Congress on the issue of toy safety, explaining that “Wal-Mart bears a lion share of responsibility for pushing the toy industry to a place where worker health and safety are basically nonexistent.”

Wal-Mart also holds the ignominious title of being the only company investigated by Human Rights Watch for its domestic labor practices. The group’s 2007 report labeled Wal-Mart’s union-busting policies a violation of basic human rights, saying:

It pursues its anti-union agenda relentlessly, often from the day a new worker is hired, devoting considerable time and resources at all levels of the company to the anti-union drumbeat.

The constant stream of allegations have damaged Wal-Mart’s reputation and in turn, its profits. In 2007, a Bank of America analyst’ report found that Wal-Mart’s profits had suffered as a result of organized labor’s opposition to the company and its unethical labor practices.  The report noted that the union’s campaign “has cost WMT [Wal-Mart] real estate sites in key locations, adversely impacted comp store sales to some degree, and has distracted m management from focusing on its retail strategy. Additionally, Lee Scott now spends a large amount of time improving WMT’s image domestically and abroad, and WMT has been forced to focus advertising dollars on defending their brand.”

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