Wal-Mart in China

| Thu Jun. 30, 2005 10:39 AM PDT

In the middle of its big cover package on China this week, Time is running an interesting bit about Wal-Mart's relationship with its suppliers in the country. Interesting because it doesn't include all the usual horror stories; far from it, Wal-Mart on this account seems to be beneficial to both Chinese businesses and workers:

 

It is not easy being a supplier to [Wal-Mart]. "In fact, it's very tough," concedes [managing director in charge of procurement, Andrew] Tsuei. Wal-Mart says it's trying to export its American-style standards and ethics to China's manufacturing sector too. In China, where sweatshops are alive and well, the company insists those measures make a difference. Suppliers, including those who sell to Wal-Mart indirectly through other companies, must limit the work week to 40 hours plus no more than three hours of overtime a day, meet safety requirements and provide decent accommodations for workers. Even those critical of Wal-Mart concede that the standards can make conditions at a Wal-Mart supplier's factory more bearable than they are at a lot of other low-wage factories in China. "When the standards are enforced," says [Alejandra] Domenzain [associate director of Sweatshop Watch], "I think they are a step in the right direction. The question is, How rigorously are they enforced?"

 

 

These days, Wal-Mart is concerned that suppliers are getting extremely sophisticated at faking records to show compliance, even coaching workers before inspectors show up. "Most Chinese manufacturers don't understand why we focus on ethical standards," says Tsuei. "They ask questions like, Well, if I do this, then I'll have to increase costs. We say these are things we have to have."

 

 

To enforce the standards, Andy Tang, Wal-Mart's Far East manager for ethical standards, travels across China, making unexpected visits to all of the company's suppliers. In 2004, more than 6,500 representatives of suppliers and factories underwent the standards training. When Tang visits a factory, he sticks a cardboard placard on the table announcing the company's policy: no gifts, no kickbacks. He won't even sit for the traditional Chinese banquet. Some "officials are pretty moved when they see that because they're used to a different way," says Hatfield.

 

Hmm. So that's the official Wal-Mart line—but is it true? The Washington Post ran a report back in February 2004 with one labor organizer noting that the inspection system wasn't effective: "The factories are usually notified in advance, and they often prepare by cleaning up, creating fake time sheets and briefing workers on what to say." It's not clear whether Tang's surprise visits are getting around this problem. Meanwhile, the Post discovered that Wal-mart doesn't regularly inspect its suppliers' subcontractors, or the Chinese manufacturing operations of U.S. multinationals like Mattel or Dell. The day after the Post's story, meanwhile, the National Labor Committee put out a report criticizing Wal-Mart for ignoring poor working environments, docked paychecks, and forced overtime in its Dongguan City factories. As best I can tell, sure, Wal-Mart is having a positive effect in some regions, and on certain suppliers; but this is quite far from the idyllic picture painted by Time.

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