Walmart and Government in China

Topics: China, People's Republic of China, United States Pages: 5 (1576 words) Published: January 19, 2013
Government and Walmart
When Walmart decided to expand into China, a countless number of hurdles stood in its place. They knew that the store model that has made them the number one retailer in the world was not going to work within Chinese culture, but just how much different would they have to be from the cookie-cutter stores that are found all across the United States? In order to dominate the retail market in China as successfully as they have in other markets across the world, dynamic change and the ability and willingness to work with the Chinese government would be crucial to their success in China. Faced with the strict rules and regulations that would hamper their growth and general operations, Walmart had to find a way to make and keep China and her people happy. Along with all the excitement, pomp, and circumstance that Walmart would bring into China, certain blemishes would follow as well. Low wages, discrimination, and utter dominance over an area it occupies left many questions as to whether Walmart would be accepted or rejected. But the first stumbling block that Walmart would have to face upon entering China would be one of its most challenging: The Government of the People’s Republic of China (Naughton).

Upon entering any foreign market, one of the biggest problems facing Walmart and its expansion is government regulation and government worry over the massive company’s monopolization and impact on local markets. Moving into China, Walmart was going to have to assure the Chinese government that they were there to give the Chinese people a better retail alternative, provide abundant employment, and help China’s economy by establishing healthy competition, all while providing the Chinese people with an increased range of products and increased product quality available at the lowest possible prices (Huffman).

Walmart in the United States is a very powerful company. In other countries, however, they are not viewed the same. This became very clear when they entered into China. Walmart faced problems that couldn’t be fixed with quick solutions. Finding suppliers, dealing with unions, rigid local competition, and cooperating with a communist government are examples of such problems. Once it found solutions to the above problems, Walmart opened a Supercenter and Sam’s Club in Shenzhen in 1996 (Foreman).

Walmart China, as it is known today, actively participates in communities by providing funding for charities, education and medical care. In fact, in April of this year, Wal-Mart launched its third annual nationwide community service week: “Keeping the Traditional Virtues – Walmart Filial Piety Activity”. For a period of one week, community service for the elders of each specific community holding the event was performed. This government and community involvement is necessary for Walmart and the trust it needs to gain from the Chinese people (Walmart).

When Walmart first opened its doors back in 1996, they first felt the restraints from the government while trying to put products on their shelves. As an result of Mao and the period when every village and community was designed to be self sufficient, Walmart could not set up conventional distribution centers such as are found here in the United States. Products that would move from one city to another would require the approval of local officials, a task of staggering proportions. Instead, Walmart has had to set up buyers in each community and city that it operates in to purchase items that have to be bought locally through government and state approved vendors. Because of this, there are not very many national brands that can be found inside of Walmart China. This is gradually changing as China evolves and her people become more influenced by western culture and style. An example would be with cosmetics. When Walmart China first opened, the cosmetics available would not sell. It wasn’t until demonstrations were given and the local Chinese ladies were given...
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