Walmart China
HKU984
ALI FARHOOMAND
WAL-MART IN CHINA (2012)
Introduction
Summer was making its picture-perfect debut in New South Wales that day in October 2011, but Mr Greg Foran hardly noticed. Newly hired away from his role as head of Australia’s leading supermarket chain, Woolworth’s Supermarket Division, he was set to work as a senior vice president at Wal-Mart International, the fastest growing division of the world’s largest retailer, Wal-Mart Corporation. However, what exactly he would be doing was still open to discussion. It was not until the sudden and somewhat mysterious departure of Mr Ed Chan, the president of Wal-Mart China, that Foran’s new role suddenly emerged. That Australian summer, far from the approaching winter back in Bentonville, Arkansas, Wal-Mart’s corporate headquarters in the United States, Foran tried to learn more about why Chan had resigned after only four years at Wal-Mart China’s helm. China promised Wal-Mart a market potential like none seen since the company’s own monumental growth and retail dominance in the United States decades earlier. Was it the pork-labelling probe that temporarily shut all 13 of Wal-Mart’s stores in the southwestern Chinese city of Chongqing (not to mention the detaining of over two dozen employees) nine days earlier that forced Chan’s departure? Or was it the resignations, only five months earlier, of Chan’s chief financial officer and his chief operating officer? Although all the executives cited “personal reasons”, the financial media suggested that it was Wal-Mart International’s plans to introduce its Every Day Low Price (“EDLP”) pricing strategy in China that prompted the resignations. But how could such a successful model for cost reduction be viewed as negative in the Middle Kingdom? Foran found out the answers to many of his questions when, five months later, in early February 2012, Mr Scott Price, then president and CEO of Wal-Mart Asia and the interim CEO for Wal-Mart China, announced Foran’s
ALI FARHOOMAND
WAL-MART IN CHINA (2012)
Introduction
Summer was making its picture-perfect debut in New South Wales that day in October 2011, but Mr Greg Foran hardly noticed. Newly hired away from his role as head of Australia’s leading supermarket chain, Woolworth’s Supermarket Division, he was set to work as a senior vice president at Wal-Mart International, the fastest growing division of the world’s largest retailer, Wal-Mart Corporation. However, what exactly he would be doing was still open to discussion. It was not until the sudden and somewhat mysterious departure of Mr Ed Chan, the president of Wal-Mart China, that Foran’s new role suddenly emerged. That Australian summer, far from the approaching winter back in Bentonville, Arkansas, Wal-Mart’s corporate headquarters in the United States, Foran tried to learn more about why Chan had resigned after only four years at Wal-Mart China’s helm. China promised Wal-Mart a market potential like none seen since the company’s own monumental growth and retail dominance in the United States decades earlier. Was it the pork-labelling probe that temporarily shut all 13 of Wal-Mart’s stores in the southwestern Chinese city of Chongqing (not to mention the detaining of over two dozen employees) nine days earlier that forced Chan’s departure? Or was it the resignations, only five months earlier, of Chan’s chief financial officer and his chief operating officer? Although all the executives cited “personal reasons”, the financial media suggested that it was Wal-Mart International’s plans to introduce its Every Day Low Price (“EDLP”) pricing strategy in China that prompted the resignations. But how could such a successful model for cost reduction be viewed as negative in the Middle Kingdom? Foran found out the answers to many of his questions when, five months later, in early February 2012, Mr Scott Price, then president and CEO of Wal-Mart Asia and the interim CEO for Wal-Mart China, announced Foran’s