A pork scandal forced Wal-mart to shutter more than a dozen Chongqing locations last week, and now its top China executive has stepped down. From Xinhua News:
Ed Chan, who served as president and CEO of Wal-Mart’s Chinese business for almost five years, is leaving the company “for personal reasons,” the company said in a statement posted online Monday.
Scott Price, president and CEO of Wal-Mart Asia, will serve as interim leader for Wal-Mart China until a new CEO is named, the statement added. Clara Wong, senior vice president of the human resources department of Wal-Mart’s China operations, has resigned as well.
Last week, 13 Mal-Mart stores in the city of Chongqing were ordered to temporarily close for 15 days for overhaul after the company was accused of fraudulently selling ordinary pork as organic pork. The local government fined the stores 2.69 million yuan (421,792 U.S. dollars).
While Reuters sheds light on the flaws in Wal-mart’s China strategy, the Associated Press reports that analysts view the penalty as harsh but consistent with the current political climate in Chongqing:
The China Industry and Commerce News said in an online report Wednesday that Wal-Mart’s treatment was part of a food safety campaign launched by Chongqing earlier this year and that authorities there were taking a “zero tolerance” approach toward violators.
Such tough talk is characteristic of the city under Bo Xilai, the Communist Party secretary of the sprawling metropolis who has won acclaim for cracking down on gangs, prostitution and other organized crime.
Stocker, the consultant, said going after a high-profile company like Wal-Mart and hitting them with a hefty punishment is consistent with Bo’s patriotic and also tough-on-crime image and dovetails with his political agenda.
“It’s probably a mixture of political positioning ahead of the leadership transition, with people there (in Chongqing) wanting to be seen as consumer advocates, and also an effort to balance some of the bad press Chinese companies have gotten, to show that they’re not the only ones with problems,” said Stocker.