Wal-Mart' s website gives a brief introduction to its Chinese operations.
(emphasis mine) [my comment]
A Brief Introduction to Wal-Mart in China
Wal-Mart Stores, Inc. was founded by American retail legend Sam Walton in Arkansas in 1962. Forty four years later, Wal-Mart serves more than 176 million customers per week. It is the world' s largest private employer and retailer with over 1.9 million associates worldwide and more than 7,000 stores in 14 countries.
Wal-Mart came to China in 1996. The first Supercenter and SAM'S CLUB were opened in Shenzhen, Guangdong Province. Today, there are 104 units in 55 cities, including 99 Supercenters, 3 SAM' S CLUBs and 2 Neighborhood Markets. Across China Wal-Mart employs over 50,000 associates.
Wal-Mart firmly believes in local procurement [except in the US]. We recognize that by purchasing quality products, we can generate more job opportunities, support local manufacturing and boost economic development. Over 95% of the merchandise in our stores in China is sourced locally. We have established partnerships with nearly 20,000 suppliers in China. At Wal-Mart, we always work with our suppliers to grow together. In August 2007, Wal-Mart once again secured the top spot of the 2007 Supplier Satisfaction Survey conducted by Business Information of Shanghai. Additionally, Wal-Mart directly exports about US$9 billion from China every year. The export volume by third party suppliers is also estimated to be over US$9 billion. [Wal-Mart appears proud of having outsourced American manufacturing jobs]
Wal-Mart strives to be a good corporate citizen wherever it operates [except in the US].
My reaction: The key point of this article is that over 95% of the merchandise in Chinese Wal-Mart stores is sourced locally, which means that downshifting by Chinese consumers helps their economy. Meanwhile, remember that 70% of the merchandise in Wal-Mart' s US stores is also from China, which means that downshifting by US consumers helps China too.
No company has done more to harm America than Wal-Mart. It has actively encouraged outsourcing, helped bankrupt American manufacturing operations (Rubbermaid), discriminated against employee based on gender/race, failed to provide health coverage (left it to States to pick up the tab), underpayed its state taxes, underpayed its workers, etc. It is a sick company involved in every bad business practice imaginable.
Instead of going through the lengthy list of Wal-Mart' s offenses, I will let walmartwatch.com do it for me.
UPDATE: February 02, 2009 7:26 PM
This entry was just too long, so I am cutting the list of Wal-Mart's offenses down to the ones that annoy me the most.
Wal-Mart health insurance coverage lags far behind national average. Nationally, 64% of workers in very large firms (5,000 employees or more) receive their health benefits from their employer. Wal-Mart covers around 50% of its employees. [Employer Health Benefits 2007 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust; Wal-Mart Press Release, 1/22/08]
Wal-Mart charges extra for ambulance usage and emergency room visits. Wal-Mart charges an additional deductible of $100 for the use of an ambulance, both land and air, as well as $100 for emergency room visits. This reoccurring cost on top of the already high deductible devalues the effectiveness of insurance and punishes employees for severe illness and injury. [Wal-Mart 2008 Associate Benefits Book, Page 58]
Wal-Mart' s new plan excludes spouses of peak-time and part-time truck drivers. This exclusion leaves the spouses of many Wal-Mart employees without a viable option for health insurance outside of public assistance. From the Wal-Mart' s 2008 Associate Benefits Book, “Peak-Time associates and Part-Time Truck Drivers may only cover their Eligible Dependent children and may not cover their spouses. Special rules may apply if you transition from Full-Time to Peak-Time.” [Wal-Mart 2008 Associate Benefits Book, Page 5]
Wal-Mart tops the list of companies with employees receiving state-funded health care in every state that released the data. Twenty-four states have tracked and reported the number of employees and dependants that the largest employers within their borders have enrolled in state-funded health care programs. The states, which have released such data include: Alabama, Arizona, Arkansas, California, Connecticut, Florida, Georgia, Illinois, Iowa, Maine, Massachusetts, Montana, Nebraska, New Hampshire, New Jersey, Ohio, Pennsylvania, Tennessee, Texas, Utah, Vermont, Washington, West Virginia and Wisconsin - Wal-Mart tops the list in all of them. In Arkansas, where Wal-Mart' s own headquarters is located, 3,971 of Wal-Mart' s 45,106 employees are on public assistance. Additionally, two states — Missouri and Oregon — will release reports of their own in 2008.
Wal-Mart sues former employee accident victim for health care plan reimbursement. Wal-Mart won a lawsuit against a former employee, injured in an accident that left her brain damaged, divorced and penniless, for reimbursement from her medical care [The Morning News (Arkansas), 11/30/07]
Study finds Wal-Mart causes an increase in state spending on Medicaid. Michael Hicks, an economist at the Air Force Institute of Technology at the Wright-Patterson Air Force Base in Ohio, conducted a study analyzing state Medicaid data from 1978 to 2003 and found that Wal-Mart causes an increase in state Medicaid spending by as much as $898 per person. [Business Week, 10/26/05]
Wal-Mart is China' s sixth largest export market. In 2006, Wal-Mart imported $27 billion of Chinese goods. Wal-Mart' s imports are responsible for 11% of the growth of the total U.S. trade deficit with China between 2001 and 2006. [Time, 6/19/05; EPI Issue Brief #235, 6/27/07]
Wal-Mart' s imports from China cost American jobs. Wal-Mart' s trade deficit with China alone eliminated nearly 200,000 U.S. jobs between 2001 and 2006. On average, 77 U.S. jobs were eliminated for each one of Wal-Mart's 4,022 U.S. stores in 2006. [EPI Issue Brief #235, 6/27/07]
Wal-Mart encourages American companies to open Chinese factories. In order to obtain Wal-Mart contracts or to continue relations with Wal-Mart, American companies are coerced by Wal-Mart to open factories in China. Lakewood Engineering and Manufacturing Company and Huffy Bikes were two such cases. [Los Angeles Time, 11/23/03; Mansfield News Journal, 12/8/03]
Wal-Mart abandons buy American program. In February 1985, Walton wrote 3,000 American manufacturers and wholesalers to announce that the chain wanted to buy more American goods. Walton said: “We cannot continue to be a solvent nation as long as we pursue this current accelerating direction. Our company is firmly committed to the philosophy by buying everything possible from suppliers who manufacture their products in the United States.” Today, however, over 80 percent of Wal-Mart' s 6,000 global suppliers are based in China. [Wal-Mart Press Release, 3/13/85; Wal-Mart Literature, 1994; PBS Frontline, 11/16/04]
Wal-Mart buys local outside of America but not in the United States. Amy Wyatt, of Wal-Mart's International Corporate Affairs division, discussed local sourcing efforts as compared to operations in the United States. “Wyatt confirmed this, saying 90-95% of products in Wal-Mart's stores outside the United States — besides Central America, the company now operates stores in Argentina, Brazil, Canada, China, Germany, Japan, South Korea, Mexico, Puerto Rico and the United Kingdom — are generally produced in the region. ‘In the United States , our local sourcing is not as high as 90%,' she explained. ‘The manufacturing just doesn't exist (there).' For example, apparel sold in U.S. Wal-Mart stores is often manufactured in Central America, she said.” [Tico Times (Costa Rica), 3/17/06]
Wal-Mart ruins Rubbermaid. In 1994, Rubbermaid won accolades as the most admired company in the United States—but five years later, its fortunes fell so hard that the company sold itself to a competitor. When the price of a key component of its products went up, Rubbermaid asked Wal-Mart for a modest price increase—but Wal-Mart said no, and stopped sales of Rubbermaid products. At a Rubbermaid factory in Wooster, Ohio, that meant the loss of 1,000 jobs. [PBS Frontline, 11/23/04]
Wal-Mart advises supplier: “Open a factory in China.” To land a supply contract with Wal-Mart, the Lakewood Engineering and Manufacturing Company—a Chicago fan manufacturer—had to locate manufacturing operations in Shenzhen, China. Workers there make $.25 an hour—while the company' s Chicago workforce earned an average hourly $13. [Los Angeles Times, 11/23/03]
Wal-Mart forces Huffy Bikes to brake US production. Despite decades of making bicycles in the United States, Huffy was forced by Wal-Mart price pressures to close three factories and lay off thousands of workers. The mayor of Celina, Ohio—where Huffy closed a large factory—said Wal-Mart' s “demand for cheaper bicycles drove Huffy out of Celina.” [Mansfield News Journal, 12/8/03]
A University of California at Berkeley study finds Wal-Mart could raise wages without compromising its low price strategy. While Wal-Mart touts its “average” wage of $10.83, most researchers conclude that the average worker at Wal-Mart makes around eight dollars an hour. A key study from the Center for Labor Research and Education at the University for California at Berkeley concludes that:
*** Increasing Wal-Mart' s minimum wage wages to $10 per hour would contribute to a payroll of $2.38 billion a year, a 9.3 percent increase over the retailers' current payroll.
*** Poor and low-income Wal-Mart workers could expect to earn an additional $1,020 to $4,640 a year in pre-tax income, depending on what they earn now and whether they work part-time or full-time.
*** If Wal-Mart shoppers were asked to absorb all of the wage increase, the average impact would be a price increase equivalent to 36 cents per shopping trip or $9.70 per year, for the store' s average consumer, who spends $1,088 per year at Wal-Mart.
*** High-spending Wal-Mart shoppers, (the 12.5 percent of store customers who account for 54 percent of all Wal-Mart sales and average expenditures of $9,775 per year) would see an additional cost of $1.47 per shopping trip, or up to $87.98 a year. The study estimates that 3.4 percent of Wal-Mart shoppers are both high-spending and low-income. [“Living Wage Policies and Wal-Mart,” UC Berkeley Center For Labor Research And Education, December 2007]
Wal-Mart' s Working Families group exposed. “Many of Wal-Mart' s political consultants came on board after Wal-Mart hired PR giant Edelman last year. Edelman has been a controversial force in Wal-Mart' s image-boosting ef¬forts. Last December, the firm formed the advocacy group Working Families for Wal-Mart, paid for solely by Wal-Mart, to counter criticism from the union-funded groups Wal-Mart Watch and WakeUpWalMart.com. The Working Families group has been at the center of several notable maelstroms swirling around Wal-Mart.” [BusinessWeek, 10/31/06]
Wal-Mart' s fake blog exposed. “For worse? A blog praising Wal-Mart called “Wal-Marting Across America,” ostensibly created by a man and a woman traveling the country in an RV and staying in Wal-Mart parking lots, turned out to be underwritten by Working Families for Wal-Mart, a company-sponsored group organized by the Edelman public relations firm. Not cool.” [Fortune, 10/18/06]
Wal-Mart' s public relations firm apologizes for Wal-Mart blog disclosure omission. “Edelman CEO Richard Edelman today issued an apology for his agency' s role in creating a blog for client Wal-Mart that did not properly disclose its origins or funding. . . The blog, walmartingacrossamerica.com, chronicled a couple' s journey across the country in an RV while stopping at various Wal-Mart parking lots. Although the blog did not initially bear any clear disclosures outside of an advertisement, the trip was funded by the group Working Families for Wal-Mart [WFWM], a Wal-Mart-backed organization designed to promote a positive portrayal of the company. The group is part of Edelman' s effort to turn around the reputation of the controversial retailer.” [PR Week, 10/17/06]
Wal-Mart' s environmental problems lie in its business model. Often the difficulty is built right into a company' s business model. It makes scant difference whether Wal-Mart starts stocking organic food or not, because the real problem is the imperative to ship products all over the world, sell them in vast, downtown-destroying complexes, and push prices so low that neither workers nor responsible suppliers can prosper. [Mother Jones, 12/06]
Wal-Mart' s environmental efforts seem like window-dressing. By building vast warehouses, carrying a huge range of stock and slashing prices, which inevitably lead to smaller retail competitors going out of business and by concreting over thousands of acres of countryside in order to provide car parking around their air-conditioned mammoth warehouses, these measures seem like pitiful window-dressing. [Seattle Post-Intelligencer, 10/29/06]
Wal-Mart faces the nation's largest workplace gender-bias lawsuit. In June 2004, U.S. District Court Judge Martin Jenkins granted class-action status to 1.6 million current and former female Wal-Mart employees who charge the company with paying women less and offering them fewer opportunities for promotion. The class is comprised of all current and former female employees employed between December 26, 1998, and the present. [Dukes v. Wal-Mart Stores, Inc., No. C01-02252 MJJ (U.S. District Court for the Northern District of California).]
Wal-Mart loses bid to block gender discrimination suit. Wal-Mart' s efforts to block the nation' s largest sex discrimination lawsuit suffered a big setback yesterday when a federal appeals court in San Francisco ruled that the case should proceed as a class action. [New York Times, 2/6/2007]
Wal-Mart losses a public battle to recoup insurance losses from brain-damaged woman. Debbie Shank, the former Wal-Mart worker severely injured in a trucking accident in Missouri, gets to keep her insurance money after all. After week of intense media pressure and public outrage, Wal-Mart made the decision not to pursue over $450,000 dollars in insurance money despite winning a Supreme Court ruling. Wal-Mart policy reversal happened after Debbie Shank' s story received heavy rotation on CNN and Keith Olbermann' s Countdown. on MSNBC as a result Wal-Mart' s lawsuit against her. [CNN, 3/25/08, MSNBC 3/27-3/31/08]
Wal-Mart refuses to hire discharged Air Force pilot. After his discharge from the Air Force for a medical condition, John K. Thornton wanted to get his old job back with Wal-Mart. Unfortunately, Wal-Mart refused to hire him back, this violating the Uniformed Services Employment and Reemployment Rights Act of 1994. Due to this obvious violation of the law, the Department of Justice filed a lawsuit against Wal-Mart. [Daytona Beach News Journal, April 2, 2008]
Wal-Mart shortchanges Minnesota workers. Wal-Mart is facing a massive lawsuit filed by four women on behalf of 56,000 Minnesota employees for failing to provide adequate meal and rest breaks. Experts estimate that Wal-Mart owes around $50 million dollars for the unpaid work. This case is one of more than seventy wage and hour cases Wal-Mart faces nationally. [Bloomberg, April 1, 2008]
Wal-Mart secretly takes out life insurance policies on its employees. Known as “dead peasant” insurance, Wal-Mart took out Corporate-Owned Life insurance (COLI) policies on unsuspecting employees until 1995. Even thought Wal-Mart stopped taking out new policies at this time, it continued to cash in on them years later. In Texas and Oklahoma, Wal-Mart paid $15 million to settle claims it did not have an insurable interest while taking out these policies. Michael D. Myers, an attorney who has represented workers on these types of cases, had this say about employers using these types of policies: “Creepy's a good word for it...If you ask the executives that decided to buy these policies and the insurance companies that sold them, they would say this was designed to create tax benefits for the company, which would use the benefits for benevolent purposes such as buying employee medical benefits.” [Tampa Tribune, 7/3/07 and 3/10/8]
Wal-Mart faces class action lawsuit over truck driver discrimination. Nationally, 15% of truck drivers are African-American, yet at Wal-Mart African-Americans comprise only 4-6% of its fleet, which employs 10,000 truck drivers. In May of 2007, a district court judge ruled that Wal-Mart' s hiring policies created a common group of potential plaintiffs (African —American truckers who were not hired or deterred from applying for Wal-Mart positions), thus approving the creation of a class action suit. Wal-Mart' s latest attempts to avoid accountability include pushing the trial date back yet another year and denying plaintiffs' access to the results of a company-wide demographic survey of hiring practices. [Nelson v. Wal-Mart Stores Inc., E.D. Ark., Nos. 2:04-CV-00171; walmartdriverclass.com]
Wal-Mart pays two million in wrongful termination lawsuit. Wal-Mart agrees to pays two million in damages to Massachusetts pharmacist Cynthia Haddad after a jury determined that Wal-Mart fired her for complaining about unequal pay. Richard Fradette, a member of the plaintiff' s legal team, had this to say about Wal-Mart treats its female employees: “What the jury saw is that, if Wal-Mart will treat a well-educated, professional woman with such reckless disregard, can you imagine how they treat other women in the work force?” [Berkshire Eagle, 6/20/07]
Wal-Mart saves money on the backs of its employees. Thousands of employees have sued Wal-Mart for unpaid overtime and unfair break practices, so-called "wage and hour" lawsuits. The company currently faces more than 80 wage and hour class action cases across the country. [Wal-Mart form 10-k filed on 3/27/07]
Wal-Mart fails to provide domestic partner benefits. Wal-Mart remains one of the few national retailers that do not extend health care and other benefits to same-sex domestic partners. Wal-Mart' s major competitors including Target, Best Buy, Costco, Federated Department Stores (Macy' s), Walgreen' s and Sears Holding Corporation (Sears/K-Mart) all offer domestic partnership benefits. [Corporate Equality Index, 9/06]
Wal-Mart misleads legislators about pushing employees to public assistance. In a letter to state legislators, Wal-Mart wrote that they "provide the mechanism for associates to remove themselves from public assistance" and that they "certainly don't encourage our associates to apply for public health benefits." Documents bearing the Wal-Mart logo, however, revealed that Wal-Mart printed and provided "Instructions for Associates" regarding public assistance enrollment. Wal-Mart CEO Lee Scott has said: "There are government assistance programs out there that are so lucrative it's hard to be competitive, and it's expensive to be competitive." [Wal-Mart Letter to State Legislators, 6/20/05; Wal-Mart Social Services Documents; St. Louis Post Dispatch, 4/6/05]
Wal-Mart pays millions over Americans with Disabilities Act violations. In 2001, Wal-Mart paid $6 million to settle 13 lawsuits charging the company with widespread discrimination and violations of the Americans with Disabilities Act. Even after these lawsuits, Wal-Mart has failed to improve its behavior. Since 2001, 47 ADA lawsuits have been filed against Wal-Mart. [29 U.S.C. S 706 et seq; Business Journal, 1/20/04.]
Wal-Mart employees forced to work overtime while locked stores. In May 2007, New Jersey' s Supreme Court ruled that Wal-Mart must face a class-action lawsuit by workers who claim Wal-Mart forced them to work through meal breaks, locked them in retail stores after they clocked out and coerced them into working off the clock. The company broke state wage and hour laws and breached contracts with employees, the workers say. Wal-Mart, based in Bentonville, Arkansas, faces more than 70 U.S. wage-and-hour suits, including class actions by employees claiming the company failed to pay for all hours worked or did not compensate them properly for overtime. [Bloomberg News, 5/31/07]
Wal-Mart tries to avoid paying over $33 million in North Carolina taxes. Using real estate investment trusts (REITs), Wal-Mart sought to avoid taxes in North Carolina by paying rent to itself. Wal-Mart devised a complex restructuring and tax avoidance scheme specifically for North Carolina because, like other non-combined reporting states, a corporation can report certain subsidiaries separately. However, a North Carolina court ruled that Wal-Mart' s tax restructuring efforts had “no real economic substance.” As a result of this ruling, the state did not have to refund $33.5 million in back taxes to Wal-Mart. [Wall Street Journal, 1/6/2008]
Wal-Mart evades $17 million in Wisconsin. As in North Carolina, Wal-Mart' s use of REITs was also damaging to Wisconsin taxpayers. State tax auditors established that Wal-Mart avoided $17.7 million in taxes from1998-2000. However, Wal-Mart might not be out of the woods yet. The giant retailer may owe additional back taxes. [Milwaukee Journal Sentinel, 8/25/07]
Wal-Mart uses an Italian subsidiary to circumvent taxes in Illinois. The Illinois Department of Revenue is demanding $26.4 million in taxes from Wal-Mart for using an Italian subsidiary as a tax shelter. Using a tax avoidance scheme similar to its use of REITs in other states, Wal-Mart set up a subsidiary in Italy in order to avoid state taxation in Illinois. Nearly every Wal-Mart store in the United States is owned by this Italian subsidiary; therefore, the tax avoidance may not be limited to Illinois exclusively. [Wall Street Journal, 11/17/07]
Wal-Mart uses public dollars to subsidize growth. In order to fund its massive growth, Wal-Mart relies on over $1.2 billion dollars in “tax breaks, free land, infrastructure assistance, low-cost financing and outright grants from state and local governments.” For example, local officials in Pottsville, Pennsylvania gave Wal-Mart $2.45 million to subsidize a distribution center. Not only does Wal-Mart receive money for distribution centers, it also gets money for supercenter growth. In fact, Wal-Mart obtained $12 million in sales tax rebates to open a store in Orland Hills, Illinois. [CNNmoney.com, 11/18/2005, ]http://www.walmartsubsidywatch.com]
Wal-Mart challenges property tax assessments. With over $11 billion in profits last year, Wal-Mart still finds the time to challenge local communities over the property tax assessments. Wal-Mart often challenges and appeals local property taxes in multiple years, resulting in over 2100 cases nationally. In many cases, the valuations and appeals reveal a significant loss for the communities in terms of revenue. When Wal-Mart asks for change in the assessed value of properties, it is often to push for large devaluations in the property values and it decreases the amount of revenue for a town or city. In 2003, Wal-Mart was successful in lowering the property tax assessment of a supercenter in Aurora, Colorado from $22 million to $9.6 million; resulting in a loss of $456,000 for the Denver suburb. [Rolling Back Property Tax Payments, Good Jobs First, October 2007, ]http://www.walmartsubsidywatch.com]