The impact of Wal-Mart in China
Positive
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Negative
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If Wal-Mart were a country, then it would be china's fifth biggest trade partner, ranked before Germany and the UK. In 2002 china has exported 120 billion dollars worth of products to Wal-Mart and in 2003 the number exceeded 150 billion. |
Many suppliers were forced to take extreme measures to reduce the cost price and to meet the demand of Wal-Mart’s “Everyday low price” policy. Workers worked from 7am to 8pm for seven days a week, earning only 5-7 cents per hour, many were even denied wages. The average wage of a factory worker working directly or indirectly for Wal-Mart is 56.2% lower than the lowest legal wage in China. |
Wal-Mart has only entered China’s market for 9 years and it’s already the number one retailer. A business partner as power as this is a boost for china's economy. Wal-Mart has placed suppliers in china under immense pressure, forcing them to improve productivity and consequently pushed the economy of the entire country forward. |
To ensure the “everyday low price” policy, Wal-Mart had been exposed to be involved in a number of illegal activities, such as employing underage workers. |
In 2003 Wal-Mart’s net sales reached 256 billion dollars, 209 billion of which were from the US market alone. China’s value of exports to USA is 6.5 times the value of imports from her and China's foreign exchange reserve is ever increasing. |
China has become the battlefield of two international giant retailers: Carrefour VS Wal-Mart: by 2003, Wal-Mart has set up 35 shops in 17 cities, total investment exceeding 16 billion yuan. Carrefour has opened 42 centers in china and is planning to build 12 more. The competition within the retail market is becoming increasing ferocious. |
Community involvement in china: Involvement in education, in disaster relief, helping children, etc. |
The Chinese labor union has recently included a number of international corporations, namely Wal-Mart, in its "black list" for abusing workers and rejecting unionism. |
Increase procurement and support export of Chinese products to other countries in the world |
Many Chinese economists believe that Wal-Mart to some degrees annihilates China’s economy and industrial development. China should not only be the world’s biggest manufacturer serving the world’s biggest retailer, she should try to create her own brand too. |
Increase investment in China, especially in the west parts of China, to response to the governmental policy of "Developing the West" |
Wal-Mart poses a threat for Chinese retailers. A spokeswoman for a Chinese Retailing company says: “Wal-Mart offers a very low price, lower than most Chinese super markets.” A Chinese economist compares the competition between Wal-Mart and Chinese supermarket chain as the 'Wolf VS Sheep'. The sheep is running away from the wolf and in the end it either gets eaten or is tired to death. |
Create more employment opportunities and generate more taxes to benefit local economy; |
The French have a saying: whoever gains control over France's commercial distribution controls French economy and ultimately France herself. It is the same with China. Some say that Wal-Mart is on its way to monopolize china's retail market. Chinese government has established new laws to avoid monopoly, hopefully this measure is not too late. |
The Company contributes to the development of new infrastructure (e.g. new roads) in the vicinity of the store. |
Profits leave the community. The money local businesses generate stays in the local bank, where it is recycled within the local community.
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China competes with some labour-intensive American industries that have long been in decline, such as textiles and stuffed toys. In the mid-west, metal-furniture makers and small tool-and-die foundries face growing competition. Yet most Chinese imports are of consumer goods, competing with imports from other poor countries, whereas America's manufactures are chiefly capital goods. Even at their peak in 2001, the number of all “trade-related” layoffs represented a mere 0.6% of American unemployment. |
The arrival of a superstore signifies a disaster for the Chinese local retailers. By estimate, a Wal-Mart center of 10000 squared meters can replace 300 small shops. When Wal-Mart opens one of its supercentres, roadside shops faced bankruptcy and the former employers became employees earning much lower wage. |
Chinese retailers are able to gain experience by working for Wal-Mart or by analyzing its success. Being the world’s giant manufacturer is china’s first step to become a major world economic power. Wal-Mart works closely with consumer manufacturers, sharing their information and resources, and support manufacturing enterprises to improve production, technology and management skills. Wal-Mart introduced its advanced retailing techniques and experience to promote the Chinese retail industry standard and development.
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Many economists hold the view that Wal-Mart is exploiting Chinese labour. The “Everyday Low Price” policy means that Wal-Mart needs the cheapest labour source possible, which is to be found in China. Chinese economists believe that China should be taking advantage of her low labour cost instead of inviting transnational companies to exploit it. |