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Wal-Mart

Wal-Mart Stores was founded in 1962 by Sam Walton, and is headquartered in Bentonville, Arkansas. It is the world’s largest retailer, and is controlled by the Walton family.

Born sinners

PUBLISHED : Friday, 28 October, 2011, 12:00am
UPDATED : Friday, 28 October, 2011, 12:00am

Wal-Mart's 13 stores in Chongqing have reopened after being shut for two weeks for selling regular pork labelled, and priced, as organic. This scandal just adds to the fundamental belief that all corporations - if not supervised and regulated properly - are inherently evil and will do whatever it takes to make an extra buck. Just witness the current 'Occupy Wall Street' protests for further evidence.

Wal-Mart Stores is certainly no stranger to legal wrangles. Throughout its 60-year history, the company has faced lawsuits in the US, mainly involving claims of labour and workplace violations, sexual discrimination and product liability.

Yet, I can't find a single instance where the world's largest retailer has intentionally cheated its American customers. Nor do I think it would ever dare to. After all, the US as a functioning democracy has a fair business environment and a legal system that comes down hard on unscrupulous business practices.

I am confident that if Wal-Mart were found to have intentionally labelled non-organic food as organic in the US, the company would have been quickly shut down with its CEO summoned to Washington to answer senators' questions in a Congressional hearing while also facing the possibility of a jail term. And, for sure, those who were directly involved would be put behind bars.

But, in China, it is a different story. This is not the first time Wal-Mart has cheated its customers here, nor was it an isolated or occasional aberration in an individual store that probably went unnoticed by its corporate management.

Wal-Mart's stores in Chongqing all reportedly have a history of violations, including selling food that has passed its expiration date, overcharging customers and using misleading advertising. Since the company opened its stores in that large inland industrial city, they have been caught red-handed 20 times, and fined by the regulatory bodies for various violations.

This could not have gone unnoticed by managers at its mainland headquarters in Shenzhen. Yet, it appears that warnings from the State Administration of Industry and Commerce, plus fines, were not enough to wake management.

Just why would a company with apparent integrity in the US act this way in China? This is not just the case for Wal-Mart.

My theory is that companies are born sinners, and there is no hope of salvation. Under a good system with proper regulations, such as in the US, they tend to behave. But as soon as the regulatory environment becomes lax and the business playing field becomes a hotbed for corruption and shady practices, the ugly side of capitalism surfaces.

With less than 30 years of capitalism, China is an imperfect market that lacks many of the necessary regulatory mechanisms and government oversight necessary to keep businesses in check. After coming to China, multinational companies learn local practices so fast that they often forget their Western business values.

Companies don't deserve the benefit of the doubt. They should be presumed guilty, at least guilty in intent, until proven otherwise.

John Gong is associate professor at the Beijing-based University of International Business and Economics. johngong@ gmail.com

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