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Check out this week’s issue of the Wal-Mart Watch Weekly Update for Elected Officials – a compilation of Wal-Mart news from across the country and beyond.

This week’s issue begins with a Bloomberg report of Wal-Mart being placed on a list of most controversial companies. Also named - the company responsible for producing melamine-tainted milk in China. The list includes companies criticized for producing negative impacts on communities, health, and the environment, and was based on a study by RepRisk, a consulting firm that analyzes companies’ exposure to controversial issues and news.

You’ll also find stories from BusinessWeek and the Financial Times on how corporate giants like Wal-Mart are gearing up to battle potential pro-labor legislation in 2009. With President-Elect Barack Obama and the Democrats taking over next year, retailers are bracing to fight the Employee Free Choice Act – or EFCA – which could make it easier to organize unions in the workplace.

In addition to EFCA, you’ll find stories on Wal-Mart and the economy. And from the legal front, read about a $19 million discrimination lawsuit filed against Wal-Mart and Pepsi in West Virginia. Plus, in the world of product safety, read more about questions raised by the controversial chemical BPA, as well how Wal-Mart has been selling lead-tainted face paint for kids…a no-no anytime, and especially around Halloween.

And finally, check out our “Stateside” and “Wal-Mart International” sections to find out what’s going on with Wal-Mart around the country and across the globe. Chicago city aldermen have a wish list for an Obama presidency; the fight continues over whether Wal-Mart can build near a Civil War battlefield in Virginia; and towns in California and Nevada deny Wal-Mart the ability to sell alcohol on its store shelves.

Wal-Mart Watch Weekly Update for Elected Officials [November 12, 2008]

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Remember back in August when we wrote about Wal-Mart’s lobbying effort against carbon offset guidelines? It got picked up on a handful of blogs, and started a lively internet discussion about Wal-Mart, the “green” image the company so strongly lusts after, and the (real) global fight to reduce carbon output.

The discussion continues.

The Christian Science Monitor (who blogged about the carbon-offsets issue) today tells us how Wal-Mart is firmly opposed to any sort of required carbon footprint labeling. Here’s the spin Wal-Mart peddled to CSM:

“As for carbon-labeling, Wal-Mart’s senior vice president of sustainability, Matt Kistler, says that he doubted existing methodologies and the Wal-Mart customer’s ability to relate carbon with consumer merchandise.

“I’m not sure the consumer will ever make a purchase based on the carbon footprint,” he says, “especially the mass consumer.”

To respond:

1. How then is Wal-Mart planning to measure the carbon footprint of its suppliers at all? Remember that Wal-Mart just spent weeks puffing out its chest about how it was going to force foreign suppliers to decrease their footprints. And furthermore, Wal-Mart has shown that it’s willing to squeeze its foreign supplier every chance it gets, whether its over RFID technology, sustainability - or just good old fashioned price. Does anyone really believe that carbon footprint can’t be measured, and that Wal-Mart couldn’t or wouldn’t mandate carbon labeling if it felt it would help the bottom line?

2. Customers won’t be able to understand? How about this: a lower number is better than a higher number. I think we can all agree that EVERY SINGLE Wal-Mart shopper could understand what that means, whether or not they are concerned by it. To insinuate otherwise is insulting to the 70% + of Americans who shop at Wal-Mart. According to CSM, “In Britain, carbon footprinting – used initially to broadly measure environmental impact across a company’s entire operations – is morphing into an eco-labeling tool.” Maybe Mr. Kistler just thinks that the British are smarter than Americans?

Five years ago this story wouldn’t have raised any eyebrows. But Wal-Mart’s PR team just got headlines in virtually every major American news outlet for holding a “sustainability summit” in China and supposedly telling its Asian suppliers to get green and get ethical. There was no mention anywhere (that we saw) of mandated carbon labeling on products, so kudos to the Christian Science Monitor for pressing Wal-Mart a little on the issue. Now it’s up to us and other enviro blogs to ring the bell a little louder.

Why doesn’t Wal-Mart want to mandate carbon labeling? Maybe because showing the real footprint of each store’s 100,000+ imported products would take a major dent out of the company’s effort to look soft, friendly and green. Wal-Mart doesn’t want to show you the energy that goes into, and the carbon that comes out of, every dollar it makes - because it’s not pretty. And until the company proves otherwise, we can assume those numbers are headed up - not down.

The heart of the sustainability problem with Wal-Mart’s supply chain is simple: it’s on the other side of the world.

It’s not that Wal-Mart is the only retailer that sources from Asia - far from it. It’s not that steps can’t be taken to make its foreign suppliers more sustainable - they can and should (and hopefully will). It’s that Wal-Mart is determined to earn a “green” image, while at the same time keeping the exact same business model: huge superstores on the highway that stock cheap foreign imports that were shipped on a tanker across the pacific, and then in a truck across the country.

The bottom line: shipping a 19 cent tube sock from Shanghai to Syracuse will never, ever, be “green” - despite what pretty logos are on the package, and whatever ethical or environmental improvements the factory might make.

Are you ready to go on a carbon diet? [Christian Science Monitor]:

In Britain, carbon footprinting – used initially to broadly measure environmental impact across a company’s entire operations – is morphing into an eco-labeling tool.

Earlier this year, the British supermarket chain Tesco began labeling some of its 70,000 products to reflect the carbon released in the their production, transport, and consumption. The 3,729 store behemoth, the world’s fourth-largest retailer, now has 20 carbon-labeled items on its shelves, core items such as orange juice and laundry detergent.

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Maybe Wal-Mart doesn’t understand how products are made.

In Wal-Mart’s world, suppliers make products for Wal-Mart because the pleasure of working with Wal-Mart is so great.  In fact, the less profit a supplier makes from working with Wal-Mart, the greater pleasure!  That must be why when Wal-Mart demanded suppliers improve their “sustainability” and “safety”, Wal-Mart said it will not pay for these increased costs.  Rather, Wal-Mart said it would reward compliant factories with longer contracts of the same low-priced orders.

But in the real world - where people have responsibilities outside of their contracts with Wal-Mart (like feeding their families) - suppliers are ailing.  Many report that Wal-Mart has failed to take into consideration reality - that costs of raw materials and manufacturing have increased substantially. Many suppliers are being forced to “either supply Wal-Mart goods while not raising prices and wait to die or raise the prices and court death.”

To make reality just a little more grim, Wal-Mart is now demanding that suppliers implement radio frequency identification (RFID) to replace bar codes.  According to reports, implementing RFID will increase the cost burden on suppliers by 20 times the cost of the currently used bar code.  While the suppliers are left to figure out how to pay for the increased cost, Wal-Mart is expected to save $8.35 BILLION each year. 

As we’ve seen, coercing suppliers to produce at below cost forces suppliers to abuse labor and use inferior materials - thus creating Wal-Mart’s real need to increase sustainability and safety.

If Wal-Mart wants real, sustainable change, Wal-Mart needs to put the money behind it.  Until then, we all lose.

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If you thought you missed your opportunity to purchase melamine tainted GeGeDa brand eggs, fear not!  The eggs, which had been previously removed from Wal-Mart’s shelves in China, are back on sale!  And that’s not all!  To promote sales, Wal-Mart is selling GeGeDa brand eggs for half off!  That’s one sure way to “save money” and “live [hopefully] better [with melamine related health problems]”.

Wal-Mart claims the eggs have been tested and do not contain melamine.  Cautious consumers, however, aren’t buying it.  “Didn’t they already pulls these from the shelves?” one customer queried?  “How can they still be selling these!” exclaimed another.  According to reports, Wal-Mart is the only store selling the eggs on discount.

It’s no wonder Wal-Mart ranks last among Chinese supermarkets for food safety.

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Back in July, we told you about Procter and Gamble price increases of up to 16%.  We could see where P&G was coming from, with the increasing prices of raw materials and all, but we still wondered whether Wal-Mart would be able to see it the same way.  It turns out that Wal-Mart refused the price increase.  According to an article from the China Standards Information Consulting Service, P&G will supply Wal-Mart with “basically no profit”.  While a huge company like P&G might be able to weather Wal-Mart’s unreasonable demands, the article further explains that small suppliers don’t stand a chance.  “Some suppliers will have no choice: either supply Wal-Mart goods while not raising prices and wait to die or raise the prices and court death.”

Wal-Mart Raises Quality Standards, Supply Chain Profitless [China Standards Information Consulting Service via HC360]

The world’s largest retailer, Wal-Mart, announced on October 22 that it will raise China’s supply trade quality standards.  Starting November, the process will begin with clothing and will ultimately cover all goods. 

With greater concern on food safety and product quality, Wal-Mart can no doubt gain consumer confidence.  But even with the appreciation of raw materials and labor costs on the supply trade side, Wal-Mart has raised prices very little – it’s always been requested that the costs of raising standards be dealt with “in house”.  Under these circumstances, the supply trade will become even more depressed.  Some suppliers will have no choice: either supply Wal-Mart goods while not raising prices and wait to die or raise the prices and court death.

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After dragging its feet for months, Wal-Mart has finally decided to make good on its promise to donate to the earthquake relief in Sichuan, China by actually donating something!  On October 26, Wal-Mart held a donation ceremony (pictured on the right) to donate 2,566,000RMB (about $375,000) worth of ambulances and medical supplies to 20 different organizations in several cities throughout Sichuan.  And never one to miss out on publicity, Wal-Mart has even tagged the ambulances with the Wal-Mart brand (pictured after the jump).

Since the 8.0 magnitude earthquake devastated Sichuan in May, Wal-Mart has been plagued by criticism for its relatively low donation to the earthquake relief and Wal-Mart’s failure to live up to said donations.  Wal-Mart China’s PR director, Jonathan Dong, has been working overtime defending the company’s image - even writing to Wal-Mart Watch, imploring us not to spread negative stories about Wal-Mart’s donation fiasco. Asked why Wal-Mart hadn’t fulfilled its donation pledge, Dong stated that spending money is difficult! Fortunately for Mr. Dong, it looks like this problem may finally be ending.

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The latest photo essay from independent photo journalist Wang Haofeng reveals the devastating reality for many Chinese workers.  Wang’s images point to the need for reform in law, regulation, and the sourcing practices of large buyers like Wal-Mart. 

Wang Haofeng Focus via chinaSMACK:

According to the essay, factory bosses use children “like robots, letting them rest only 6 hours per day,” and making them work late into the morning. 

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Check out this week’s issue of the Wal-Mart Watch Weekly Update for Elected Officials – a compilation of Wal-Mart news from across the country and beyond.

This week’s issue begins with news of Wal-Mart’s closing of a Quebec Tire and Lube Express, just two months after workers there won a precedent-setting collective bargaining agreement. The move has been wildly denounced, although Wal-Mart officials maintain that Wal-Mart is not anti-union. Following up on that, BloggingStocks.com asks whether it’s wise that the retailer would rather see an operation shut down entirely than have employees with any kind of power.

In addition, the Hartford Courant has been following an issue in Connecticut - it seems the CT Consumer Protection Department will review Wal-Mart’s double tax policy to see if it violates state tax law. And on the International side, read more about Wal-Mart’s new green store in Beijing, China, and how the retailer is claiming it will toughen standards on its Chinese suppliers.

And finally, check out our “Stateside” and “Wal-Mart International” sections to find out what’s going on with Wal-Mart around the country and across the globe.

Wal-Mart Watch Weekly Update for Elected Officials [October 22, 2008]

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So, every few months Wal-Mart holds a meeting to crack down its suppliers for one reason or another. What makes this one different enough to earn coverage in every major newspaper in the country? We’re not sure, but it definitely gave Lee Scott an international podium to further shift ethical responsibilty away from Wal-Mart and tell all of China to “do as I say, not as I do.”

Women’s Wear Daily gives what is definitely one of the most absurd quotes we’ve heard from Lee Scott in a long time (links added by me, but he might as well have put them in himself ):

“I firmly believe that a company that cheats on overtime and on the age of its labor, that dumps its scraps and chemicals in our rivers, that does not pay its taxes or honor its contracts — will ultimately cheat on the quality of its products,” said Scott. “And cheating on the quality of products is the same as cheating on customers. We will not tolerate that at Wal-Mart.”

That sounds like someone I know, I just can’t put my finger on it…

A couple other interesting bits. The Financial Times quotes a grumbling supplier:

“It’s going to make things a lot worse,” said one manufacturer at the meeting, who asked not to be identified. Others were more relaxed. “If they don’t like it, they are not going to be doing business with Wal-Mart,” said one US-based Wal-Mart supplier who sources components from China.

The New York Times’ Dot Earth Blog asks what might be the fundamental question:

Wal-Mart has been working to improve its image and lighten its environmental impact for several years now. Of course, as some campaigners against over-consumption have pointed out, Wal-Mart is still selling consumerism even as it pledges to cut the social and environmental costs of making the stuff in its stores. Can we have it all? Can we have cheap shirts and disposable batteries in a world heading toward 9 billion people seeking a decent life? I guess we’ll find out one way or the other.

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Today, Wal-Mart gathered more than a 1,000 suppliers in Beijing, China to “reveal a new supplier agreement that will require manufacturers to allow outside audits and to adhere to specific social and environmental criteria.” This so called “sustainability summit” was a public relations ploy to quell concerns that Wal-Mart has not done enough to ensure product safety, protect factory workers rights, and to lessen its global footprint. 

Wal-Mart’s current supplier standards already contain such provisions for audits and adherence to social and environmental criteria.  And while Wal-Mart’s goals of increasing unannounced audits and working with independent auditors are lofty, revising the current standards is insufficient in comparison to the real problem:  Wal-Mart’s infamous push for the lowest costs possible, no matter what. 

When Wal-Mart refuses to pay factories a fair price, many factories simply make up for low profit margins by forcing laborers to work overtime with little rest or substituting quality materials for inferior, and often toxic, ones.  When audits occur (usually within the factory confines), workers have been coached on appropriate responses for passing the audit.  In short, Wal-Mart is getting exactly what it pays for.

And that Lee Scott thinks “offering long-term agreements to suppliers willing to make the big investments needed to live up to Wal-Mart’s environmental demands” would be adequate compensation for the necessary changes is not only insulting, it’s absurd.

As Shao Zhuliang a Chinese business executive said “It’s always hard to make money from Wal-Mart orders.” In fact, reputable factories that meet standards and provide quality products have refused to work with Wal-Mart because the orders are unprofitable and that the risks and logistics of working directly with Wal-Mart are not worth the price.

If Wal-Mart is going to change, it needs to put its money where Lee Scott’s mouth is.

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According to Wal-Mart, Wal-Mart China’s sales growth is “very like 25, 30 plus percent a year”.  What Wal-Mart refuses to reveal, however, is how much 25 or 30 plus percent a year equals, in ‘like’ money or ‘like’ profit.  Wal-Mart also refuses to reveal “what portion of global sales come from its more than 100 stores in [China],” Reuters reports.

The truth of Wal-Mart’s circumstances may be more accurately summarized by reports out of China which note that within its 12 years in China, Wal-Mart has failed to become profitable.  And even according to data from China’s Department of Trade, Wal-Mart’s rank within the retail sector has plummeted from 17th in 2003 to an astonishingly low 30th in 2005.

The truth is that Wal-Mart is being crushed by ever increasing competition and much needed government regulation.  And even with such great buying power, Wal-Mart is losing influence with supplier factories who are raising their prices.

Unfortunately for Wal-Mart, China may end up being another South Korea, or worse, Japan.  Investors beware!

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AP ran a story this weekend about Wal-Mart’s expansion into China’s hinterlands. The story reveals how in China, Wal-Mart is being forced to change how it does business.

First, it has welcomed Chinese organized labor into their stores to represent its workers. Wal-Mart’s opposition to unions in North America is so strong that just last week Wal-Mart chose to close a Tire and Lube Express in Quebec rather than accept a union contract in that shop.

Second, it is being forced to grow faster in China than the infrastructure it needs for support is developing. As Emek Basker, a University of Missouri economics professor points out in the piece, Wal-Mart had a conscious policy in the United States to only open stores that were within a day’s drive of a distribution center. Facing pressure from French giant, Carrefour, and possibly the demands of the Chinese government, Wal-Mart is being forced to abandon that policy in China.  In addition to a less convenient distribution network, add a less developed Chinese infrastructure of highways.  Now pile on top greater pressure to localize store purchases and that gives you the third way Wal-Mart has been forced to do things differently in China:­ buy local.

As Dean Xu, professor of strategy and international business at the University of Hong Kong, points out in the article, Wal-Mart will have to source many goods from local suppliers, potentially raising quality issues. “If there is one incident, it can ruin your company’s reputation,” Xu said.

And we know that Wal-Mart’s inability to “go local” is part of the reason it failed in South Korea and Germany and is performing poorly in Japan.

China is so much larger than any of those three countries and therefore the problems associated with going local are larger too.  If Wal-Mart succeeds (and it’s a very big “if” - the last we heard, Wal-Mart China still wasn’t profitable), it will become a very different from what we see today. And it certainly won’t look anything like company that Sam Walton passed down to his children.

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Wal-Mart’s outlook in China has been looking grim - from rumors that the Chinese operation has been profitless for the last 12 years and that its “market share has retreated in defeat” to public outrage and employee protests.  An article from today’s People’s Net adds even more doubt to the retailers future in China:

An official from Haikou revealed at a press conference that Wal-Mart would be postponing its entrance into Haikou.  The reason is that Wal-Mart’s own investment plan has changed.  As for when Wal-Mart could enter Haikou, city officials said Wal-Mart is still making a great effort, but that currently Wal-Mart is unable to enter the market.

Wal-Mart unable to perform? Sounds familiar.

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Like an old dog that can’t learn new tricks, Wal-Mart still hasn’t learned how to remove recalled products off its shelves.  And according to from the Straits Times, this sort of negligence can be deadly.

On September 12, we noted that Wal-Mart stores in Shanghai had not removed milk powder from their shelves, despite ongoing recalls around the rest of China.  According to an article from Ifeng, milk sales were continuing “as usual”.  Now, the media is reporting that “up to five per cent of infants in Shanghai could have kidney stones after drinking tainted milk formula” and that a Wal-Mart store in Macao is still selling Chinese milk.

How many children must die before Wal-Mart learns how to effectively recall products? From melamine tainted infant formula to bassinets with strangulation hazards and to lead tainted bibs and toys, Wal-Mart has continually dragged its feet on recalling dangerous products, particularly for children and babies - making clear that the retailer’s profit motives come before the safety of their customers.

Please, Wal-Mart, before we read the headline next week “Macao Mother Looses Child Due to Melamine Tainted Milk from Wal-Mart” take action and remove these products from your shelves in a systematic, responsible way.

5% of Shanghai kids ill [Straits Times]

UP TO five per cent of infants in Shanghai could have kidney stones after drinking tainted milk formula, media reported on Friday, as publicity surrounding the scandal was muted by China’s manned space launch.

Beijing is battling public alarm and international dismay after thousands of Chinese children were hospitalised, sick from infant milk formula tainted with melamine, a cheap industrial chemical that can be used to cheat quality checks.

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THE NEWEST FAD DIET: LIVING NEAR A WAL-MART
Exciting news from the Wal-Mart Watch blog room: since we found out about this study earlier in the week, we’ve all started spending lots of time at our nearest Wal-Mart, and we’re loosing weight like crazy! As Richard Simmons says, “We’re fabulous!” Diets in Review points out the real reason Wal-Mart shoppers might be losing weight: they’re too poor to eat!

Wal-Mart Good for Your Health? [Diets in Review]

I’m still skeptical. For one, there seem to be too many variables to prove their theory. Plus, the study also found that an additional Wal-Mart also led to decreased exercise. Either way, it seems there are other factors to include, like a a down economy that may lead people to eat out less, which should have a positive effect on waistlines.

The Wal-Mart Diet [Seeking Alpha]

Courtemanche and Carden also found evidence that purchases of fruits and vegetables increased after the introduction of a big box retailer. But the news isn’t all good: An additional Wal-Mart also led to decreased exercise, though the reasons for this are somewhat mysterious. The researchers suggest a couple of reasons...Neither of these is very convincing though.

NeoNeocon and the Healthy Food Review offer a different explanation:

My theory on the Walmart Diet [NeoNeocon]

I beg to differ. Even though the study reports that a Walmart leads to decreased exercise, I still think exercise might be the key. My theory is that whatever the decrease in other exercise reported in the study (and I assume activity level was not measured, but was based on self-report), it left out one extremely important factor: the exercise involved in shopping in a Walmart itself. Think about it—have you been in one lately? I have. Those babies are huge.

Wal-Mart Diet Exists According To New Study [Healthy Food Review]

My theory?  Shopping at a Wal-Mart Super Center especially gets you walking a lot more than it does at a smaller store.  In fact, when I lived in Colorado, my local Wal-Mart Super Center was in quick walking distance in cold snowy, weather, and my husband and I would purposely go to get out and do a bit of a walking workout.  In Las Vegas, I’ve been doing it all Summer in the triple digit temperatures.

Shopping At Wal-Mart Makes You Thinner [Health Care BS]

And just think: while you’re in there buying your cheap fruits and veggies, you can go to the retail health clinic and have that sinus infection looked at. I love the free market!

After the jump, Wal-Mart moms and unions in China.

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You might recall several posts we did regarding Wal-Mart’s donations to China’s earthquake relief efforts.  Those posts all cited numerous articles which detailed not only Wal-Mart’s meager donation pledges, but also that Wal-Mart had largely failed to follow through on their donations.  Worse, another story surfaced about how Wal-Mart would potentially profit off the earthquake victims by building stores in the earthquake region.

All these posts were a bit too much for Wal-Mart China’s director of public relations Jonathan Dong.  He even wrote us a strongly worded letter to express his dismay.  Unfortunately for Jonathan Dong, this story just won’t end.

According to a recent article from Beibu Gulf ASEAN Economic Web, Wal-Mart STILL has not met its donation targets!  Luckily, Jonathan has prepared a response:  “Spending money is hard.”

Public relations director Jonathan Dong (董玉国) explained “contributing money is easy; spending money is difficult. On May 23, Wal-Mart decided to give away an additional 17 million .  The company immediately looked for projects to aid, looking at subsidizing schools, orphanages, etc.  But Wal-Mart found out that many [companies] were financing the same projects.” At present time, Wal-Mart is in the process of seeking suitable projects to support.

Imagine that. 

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According to a recent article in Bloomberg, a series of babies have fallen ill with kidney stones across seven provinces in China - one has died.  It is suspected that melamine contaminated powdered milk manufactured by Sanlu Group is responsible.  The Chinese ministry of health stated that Sanlu has recalled the milk powder while the investigation proceeds. 

Bloomberg also notes that Wal-Mart Stores Inc. is said to be pulling Sanlu milk powder off its shelves, citing Wal-Mart China spokesman Dong Yuguo.  However, in a report from Ifeng Finance (China), Wal-Mart stores in Shanghai are still selling powdered milk “as usual”. 

Exacerbating this horrific situation, “contaminated baby formula may also have reached the U.S., according to the U.S. Food and Drug Administration, which warned consumers that illegally imported Chinese milk powder may contain melamine.”
China Says Sanlu Milk Likely Contaminated by Melamine [Bloomberg]

China’s health ministry said milk powder produced by Sanlu Group Co., 43 percent owned by Fonterra Cooperative Group Ltd., may have been tainted with the chemical melamine and could be linked to kidney stones in infants.

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According to an article out of Zhejiang, China, Wal-Mart workers in Jiaxing have recently earned the right to demand raises from their boss.  This little known practice at Wal-Mart stores throughout the world can be realized, the article says, by unionizing and signing a collective contract.  The particular contract that Jiaxing Wal-Mart workers signed gives the workers the right to negotiate issues such “wage levels, wage increases, paid vacation, as well as worker protections.”

In addition to Jiaxing workers, Wal-Mart employees in Changchun also signed a collective contract this week.  Perhaps this is making Wal-Mart U.S. a little more than nervous.

In Jiaxing a Collective Contract Is Born:  Wages Will No Longer Be Up To The Boss [Zhejiang News]

“Boss, give me a raise.” This sentence is something workers dare to think, but do not dare say.  Yesterday morning, 350 workers from the Jiaxing Wal-Mart store on Hong Street agreed to and signed a collective contract.  This means that in the future, workers will have the proper right to discuss pay levels with their boss.  According to our understanding, this is the first time a collective contract has been attempted in Jiaxing’s service industry. 

[continued below]

Also see Wal-Mart Changchun Branch Signs Collective Agreement [China CTV] after the jump.

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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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...back to Hong Kong!  The new headquarters “will have strategic responsibilities for managing the company’s current operations in Asia and for business development,” said President and CEO for Wal-Mart Asia Vicente Trius.  Additionally, “the new Wal-Mart office in Hong Kong will oversee the company’s operations in the Chinese mainland, India and Japan, as well as identify new business opportunities for the company throughout Asia.” But what Trius doesn’t address is why Wal-Mart’s Asia headquarters is moving.

It was a only a few years ago that Wal-Mart traded Shenzhen for Hong Kong.  From March 2005:

Wal-Mart, the world’s largest retailer, plans to move its Asian headquarters from Hong Kong to Shenzhen in southern China next August, state media reported. Construction of the new headquarters building has begun, according to Shenzhen International Investment Commercial Property Co, US-based Wal-Mart’s partner in China. 

So why, just over three years later, would Wal-Mart move back to Hong Kong?

According to Wal-Mart Asia’s Vice President Brian Walker “Wal-Mart is able to recruit the right local staff for its regional headquarters with the [Hong Kong]’s abundant pool of talent and professionals, together with its excellent transportation, communications and technology infrastructure.” So why leave HK in the first place?  And, ouch - what is Walker implying about Shenzhen’s local talent?

However, for Hong Kong residents, there’s no need to worry:  “Despite choosing Hong Kong as the regional base ahead of Singapore and Shanghai, Trius said Wal-Mart had no immediate plans to open a store in the southern Chinese city. ‘I would say the availability of properties is a challenge here. We are not talking about prices,’ he said.”