Monday, March 01, 2010

Beyond Everyday Low Prices: The New Sheriff in China Stresses Environmental, Labor Standards

From yesterday's Washington Post:

Wal-Mart has more than 10,000 suppliers in China. In addition, about a million farmers supply produce to the company's 281 stores in China. If Wal-Mart were a sovereign nation, it would be China's fifth- or sixth-largest export market. So the company hopes that small measures taken by all suppliers start to add up. Its 200 biggest suppliers in China have already trimmed 5% of their energy use.

In the past, environmental concerns have taken a back seat to growth in China and to costs for Wal-Mart. And China and Wal-Mart have come under sharp criticism for conditions in factories. Yet pollution now threatens China's growth; as a result, awareness of climate change and energy security has spread in China. Likewise, as consumers grow more environmentally aware, Wal-Mart's executives have responded. On Thursday,
the company pledged to reduce its greenhouse gas emissions by 2015.

New suppliers are screened for environmental practices by Wal-Mart. Many China experts say Wal-Mart's guidelines could be more important than the government's.

"They are the rule setters," said Ma Jun, director of the Institute of Public and Environmental Affairs, a Beijing-based group. "Before Wal-Mart only cared about price and quality, so that encouraged companies to race to the bottom on environmental standards. They could lose contracts because competition was so fierce on price."

Wal-Mart's suppliers have been forced to get serious about pollution, Ma said. "Wal-Mart says if you're over the compliance level, you're out of business. That will send a powerful signal."


29 Comments:

At 3/01/2010 3:27 PM, Blogger sethstorm said...

Whitewash.

It's only to keep the Chinese commoners in line. Government provides security and disposal of critics, business provides a political distraction.

What stops the government over there from just disappearing a Wal-Mart official? Nothing.

 
At 3/01/2010 3:33 PM, Blogger sethstorm said...


Wal-Mart's suppliers have been forced to get serious about pollution, Ma said. "Wal-Mart says if you're over the compliance level, you're out of business. That will send a powerful signal."

...unless your family is in favor enough to get around the regulations anyway.

 
At 3/01/2010 3:45 PM, Anonymous gettingrational said...

I don't usually respect Wal-Mart becuase it has abandoned the American worker and weakend small communities -- but I have read the standards and I agree if they can be enforced.

 
At 3/01/2010 3:49 PM, Blogger sethstorm said...


I don't usually respect Wal-Mart becuase it has abandoned the American worker and weakened small communities -- but I have read the standards and I agree if they can be enforced.

The problem is that influence in that country also works against the organization. The only thing that it'll do is be a whitewash over PR-unfriendly policies that will continue.

 
At 3/01/2010 3:51 PM, Blogger PeakTrader said...

Chinese producers don't take their enormous social costs into account.

Walmart may still want quality standards and low prices from Chinese producers. So, this may squeeze Chinese producers, similar to the squeeze when commodity prices were higher.

Walmart may want to further diversify and increase production in other Third World countries.

 
At 3/01/2010 3:51 PM, Anonymous Benny The Man said...

When does PR become fact?

Labor standards and China?
Environmental standards and China?

One may to wish to wait for now. Seeing is believing.

 
At 3/01/2010 4:14 PM, Blogger juandos said...

sethstorm in his usual whine mode says: "What stops the government over there from just disappearing a Wal-Mart official? Nothing"...

Hmmm, and you know this how exactly?

You have something credible to back that statement up, right?

In the always questionable Washington Post we have this: "Whether this will help Wal-Mart's relations with U.S. customers isn't clear.

"Our customers care; they just don't want to pay more," one Wal-Mart executive said.
"...

Well golly gee! It doesn't seem like Walmart customers are expressing their concern at the Walmart cash registers...

 
At 3/01/2010 4:18 PM, Anonymous Anonymous said...

If we could convince "sethstorm" and "Benny" to emigrated to China, the resulting anti-business clusterfuck would force 1000's of companies to relocate. What's more, they could undermine China's future competitiveness by handing out the works of Marx, Chomsky and Zinn. It would take the Chinese generations to recover.

 
At 3/01/2010 4:26 PM, Blogger sethstorm said...


Well golly gee! It doesn't seem like Walmart customers are expressing their concern at the Walmart cash registers...

Abstract the Chinese policy enough and they're not going to care. They could be killing people daily as a course of their work and it'd still not make an impact on the cash register.

Look at how their government and business operates so closely together. Then note how said relationship results in mostly dead, disappeared, or jailed critics in that country.

Of course, if you want to defend the Third World flavor of cronynism, go right ahead.


Walmart may want to further diversify and increase production in other Third World countries.

...and it will only expand the problem.

 
At 3/01/2010 4:30 PM, Blogger sethstorm said...


If we could convince "sethstorm" and "Benny" to emigrate to China, the resulting anti-business clusterfuck would force 1000's of companies to relocate

They have an uneasy relationship with their own Mao. That is, they're more likely to identify with Deng Xiaopeng for ideology, but keep Mao for tradition.

Besides, there are better ways to collapse China.

 
At 3/01/2010 4:44 PM, Anonymous gettingrational said...

"2. Voluntary Labor
All labor must be voluntary. Child, forced, bonded, prison, or indentured labor will not be tolerated. Workers must be allowed to maintain control over their identity documents. Suppliers must provide workers with rest days and must ensure the working hours are consistent with local regulations and not excessive."


If Wal-Mart can enforce this in China then they have abilities the U.S. government does not. The U.S. has been trying for many years to have independent inspectors look for forced prison labor, as granted in trade agreements, and has not been successfull. I hope Wal-Mart is able to enforce its rules.

 
At 3/01/2010 5:27 PM, Anonymous Anonymous said...

Forced labor?

Isn't that what the welfare state reduces all prodcutive people too? If anyone is in favor of forced labor it's the American left.

 
At 3/01/2010 5:39 PM, Anonymous Lyle said...

Wal-Mart has realized that since it wants to be big in Chinese retailing that if it gets caught in these bad practices at its contractor it will rebound to hurt it at the cash register. This would both be in China and elsewhere around the world. Now this does mean for clothes and the like Wal-Mart may follow other companies and move clothing making to Pakistan.
Note that pollution has become a concern of the chinese middle class and as happened in the US 100 years ago as people get richer they are more willing to campaign for a cleaner environment. Recall Pittsburgh 100 years ago, smog was regarded as a sign of economic progress.
Also consistent with how Wal-Mart now stocks light bulbs the CFL's in the center and the old bulbs at the edge.

 
At 3/01/2010 5:57 PM, Blogger juandos said...

"Abstract the Chinese policy enough and they're not going to care. They could be killing people daily as a course of their work and it'd still not make an impact on the cash register"...

And the problem is what?

 
At 3/01/2010 6:07 PM, Anonymous Benny The Man said...

Hey Eeverybody, I hear Mexico is going to clean up corruption!

Everything is okay now!

I don't think that $1.4 billion Bush sent to Mexico to fight the drug lords was wasted, after all.

 
At 3/01/2010 7:15 PM, Blogger Marko said...

We are now so wealthy that we have the luxury to complain about companies that provide us with with lower cost goods. What is bad about low prices, are higher prices better? How does this "weaken local communities?" How is importing cheap goods "abandoning American workers?" Doesn't it benefit workers to have cheaper goods to buy?

Do any of you Walmart haters really want a job on a manufacturing line making shoes for a couple dollars a day? Really, do you? If not, than don't begrudge the job to someone that really, really wants that job at that price.

 
At 3/01/2010 9:33 PM, Blogger misterjosh said...

I still can't figure out what's so bad about child labor. Who the hell are we to tell other people how to run their country?

 
At 3/01/2010 10:35 PM, Anonymous TheDude said...

"What's more, they could undermine China's future competitiveness by handing out the works of Marx, Chomsky and Zinn. It would take the Chinese generations to recover."

3/01/2010 4:18 PM

Dude, I hate to break this delicate fact but China is Communist. The economy is controlled almost completely at the national, provincial and local levels by state ownerwhip. The two commentors that you cite are citing this fact. You are ignorant about this but that's salvalgable with a little light reading.

 
At 3/01/2010 11:13 PM, Anonymous Anonymous said...

PR firms - Hitler would have loved them! Sorry, but profits come before all else; so what if a little chalk gets washed off the sidewalk?

 
At 3/01/2010 11:17 PM, Anonymous Anonymous said...

"I still can't figure out what's so bad about child labor. Who the hell are we to tell other people how to run their country?"

The US managed to run its war economy during WWII without child labor, and Europe and Japan managed to rebuild their devastated countries afterwards without little hands. If you like child labor so well, go send your own kid(s) off to work 14- or 16-hour shifts, seven days a week, at a shoe factory. He or she gets a finger cut off... too bad!

 
At 3/01/2010 11:20 PM, Anonymous Anonymous said...

"Isn't that what the welfare state reduces all prodcutive people too? If anyone is in favor of forced labor it's the American left."

Yup, I see it all over now: gulags, forced-labor camps, soda machines with one flavor - just like it is in Europe and Japan. Thanks for the monochrome vision.

 
At 3/02/2010 1:03 AM, Anonymous Anonymous said...

Dude, I hate to break this delicate fact but China is Communist. The economy is controlled almost completely at the national, provincial and local levels by state ownerwhip.

Dude, I hate to break this delicate fact but China is communist, like Zinn was an historian. They gave up on the "workers paradise" some time ago. And while they may still have some state owned firms that they have not sold off, and they still suffer from the wretched poverty and centralized authority that is the legacy of any experiment with marxism, they're making progress. Did you believe that after suffering economically for more than half a century the magic of communism has finally kicked in? You are ignorant about this. As to whether your salvageable, well, maybe with a little more reading.

 
At 3/02/2010 12:10 PM, Blogger Jet Beagle said...

gettingrational: "I don't usually respect Wal-Mart becuase it has abandoned the American worker and weakend small communities"

Please explain how Walmart abandoned the American worker. Walmart promoted "Made in America" for about a decade after almost every other retailer was sourcing goods from overseas. The American consumer consistently showed that "Made in America" was unimportant. It was not Walmart which "abandoned" the American worker. It was the American consumer who decided lower prices were more important.

Please explain how Walmart weakened small communities. It was Walmart's small town customers who had sufferred decades of higher prices and limited selection from local retailers. When Walmart gave them an alternative, the small town consumers abandoned the small town retailers who had not been meeting their needs.

 
At 3/02/2010 12:43 PM, Anonymous gettingrational said...

Jet Beagle,

Wal-Mart has weakened small towns by locating out of ther preiphery of other businesses and offices. The critical mass of the samll community is fractured by locating in the wheatfield five miles out of town. An example of civic minded mass retailer would be Fred Meyers in Ellensburg, WA. Fred's located two blocks from downtown, attracting more customers to the town and even greater critical mass.

You state that Wal-Mart used to promote made in America, yes that's true. Wal-Mart is now China's largest private customer but not because the customer demanded it. The company abandoned the U.S. worker when Sam Walton passed. I think he would disaprove of this business strategy in a country that provided so much for him and his family.

Sam Walton would have insisted that his buyers drive the best bargains with producers of U.S. made products. Sam always complained his buyers wern't doing enough.

 
At 3/02/2010 5:04 PM, Blogger juandos said...

"Wal-Mart has weakened small towns by locating out of ther preiphery of other businesses and offices"...

Did it occur to you that maybe the small towns should've gotten competitive with the periphery and not try to gouge Walmart instead?

Did not also occur to you that Walmart needs a lot of space? Many acres worth...

 
At 3/03/2010 12:18 PM, Blogger Jet Beagle said...

gettingrational: "The company abandoned the U.S. worker when Sam Walton passed."

You've got it backwards. It was the American consumer who voted - with his wallet - to buy less expensive goods produced overseas. Wal-Mart's "Buy American" campaign proved to be no competitive advantage and so they abandoned it.

Wal-Mart - and all other profit-seeking corporations - are in business to maximize the returns to shareholders - not to maximize the wages of American factory workers at the expense of American consumers.

 
At 3/03/2010 12:22 PM, Blogger Jet Beagle said...

gettingrational: "Wal-Mart has weakened small towns by locating out of ther preiphery of other businesses and offices."

Sorry, but I do not see how providing lower prices, convenient parking, and greater selection to customers "weakened small towns". Yes, it probably weakened inefficient retailers who could not compete. But those inefficient retailers were doing nothing to "strengthen" small towns.

 
At 3/03/2010 12:54 PM, Blogger sethstorm said...


The American consumer consistently showed that "Made in America" was unimportant. It was not Walmart which "abandoned" the American worker. It was the American consumer who decided lower prices were more important.

Except that their policy would show otherwise.

 
At 3/03/2010 12:59 PM, Blogger sethstorm said...


You state that Wal-Mart used to promote made in America, yes that's true. Wal-Mart is now China's largest private customer but not because the customer demanded it. The company abandoned the U.S. worker when Sam Walton passed. I think he would disaprove of this business strategy in a country that provided so much for him and his family.

Sam Walton would have insisted that his buyers drive the best bargains with producers of U.S. made products. Sam always complained his buyers wern't doing enough.

Truer words have not been spoken.

Sam died, Benedict Arnolds took his place, junk flowed in, and people couldn't object. That's what you called choice, and inaccurately so.

 

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