Orville Schell: How Walmart Is Changing China

Orville Schell, Arthur Ross Director of the Center on U.S.-China Relations at the Asia Society, visited Wal-Marts across China and has written a lengthy piece for The Atlantic looking at the “interactive” relationship between the massive corporation and the Chinese government and how its further expansion will impact the global environment:

…The young Chinese women workers in green aprons and sanitary masks make it undeniable that we’re a long way from the Ozarks. They call out their wares in Mandarin, proffering samples of soya-bean milk, date juice, and lychee jelly. Around them are mountainous piles of fresh pig intestines; pillow-size bags of dried fungus, seaweed, and mushrooms; packages of desiccated deer tendons (still attached to hooves!); inky-black dehydrated sea slugs; glistening octopuses on nests of chopped ice; and tanks of gulping fish, dazed frogs and turtles, and hyperactive shrimp.

Although Walmart’s $7.5 billion in Chinese sales receipts account for only 2 percent of the company’s annual revenues, its sales in China have risen substantially over the past decade. Sales in the United States, by contrast, have been shrinking. And as China’s retail market—the world’s fastest-growing—expands by 18 percent a year, Walmart’s executives smell the intoxicating scent of more growth to come. Equally important, if not more so, some 20,000 Chinese suppliers, or “partners,” reportedly provide Walmart with about 70 percent of the nearly $420 billion worth of goods that it sells globally each year. (Because of the complexity of the global supply chain, the percentage from China is hard to calculate.) China has become so crucial to Walmart’s supply chain that in 2002, the retail giant moved its global sourcing headquarters across the border from Hong Kong to Shenzhen, in southern China.

As I tramped across the country, from Shenzhen to Manchuria and from the North China Plain to Sichuan province, visiting Walmart retail outlets, factories, farm cooperatives, and executive offices, the Walmart/China axis loomed as something unprecedented. Beyond the sheer scale of the relationship, what struck me was how interactive Walmart and China have become. These two colossal entities, with such utterly different provenances—the world’s largest corporation and the world’s most populous country—have somehow managed to meet and maintain a state of relatively steady symbiosis, each fulfilling vital needs for the other. Just as China is providing Walmart with the lifeblood of its commercial growth, Walmart is helping the Chinese state not just to satisfy the escalating demands of its consumers but to extend Beijing’s regulatory writ. Together, they are engaging in a bold experiment in consumer behavior modification, market economics, and environmental stewardship. Just how this unlikely partnership will affect the evolution of these two larger-than-life entities is as yet uncertain. But one thing is already clear: how Walmart and China interact with each other over the next decade will be critical to the fate of the planet’s environment.

Read more about Wal-Mart in China via CDT.

November 8, 2011 2:47 PM
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