Walmart China loses customer confidence

Walmart China loses customer confidence

Staff Reporter

2014-03-16

After 40 years in China, Walmart, the world’s retailing giant, is facing a crisis of trust in the market, due to its failure to keep up consistent quality of service and its perfunctory responses to customer complaints.

One major factor is lax quality control on the part of WalMart China, as evidenced by a litany of recent complaints including some related to fake sesame sold at a store in Fuzhou, Fujian province, others concerning the sale of fox meat in the guise of beef or donkey meat at a Jinan store in Shandong province, and the sale of crab with inaccurate weight tags.

As early as 2011, Walmart was fined 2.7 million yuan (US$439,000) for selling green pork at its 10 stores in Chongqing, an addition to 21 fines levied by the local government on the company for out-of-date and sub-par foods, as well as false advertising.

Walmart China has often been accused of overcharging customers, although its managers invariably ascribe the problem to incorrect price tags or a failure to update prices.

In August 2013, a Beijing customer, surnamed Yan, sued Walmart for selling out-of-date Korean dried seaweed by translating the use by date in Korean as the production date on the Chinese tag. Critics say that Walmart isn’t concerned with rooting out these kinds of problems, due to the light penalties in China for such conduct.

This bodes ill for the chain, as China has become a critical market for it, especially at a time when it is suffering sluggish business in the US, due to the stagnant economy and government’s cut on social welfare. In the 2013 fiscal year, Walmart earned US$16 billion in net profits, down 5.7%.

“The market scale for supermarkets in China is already the largest in the world. A trust crisis among Chinese consumers will definitely affect Walmart’s business model in the nation in such a competitive market environment,” remarked an executive of a large-scale domestic chain store, according to the Chinese-language Economic Information Daily, a business journal operated under the state-run Xinhua news agency.

The journal reported that Walmart has pledged to intensify its management of the supply chain and in-store inspections, on top of strengthening management of food safety.

“There exists a big loophole in the management of Walmart China, which fails to safeguard the interests of customers, the primary task for a chain retailer,” said an official with China Consumers’ Association, according to the journal. The loophole is especially conspicuous, as it has only 100-odd stores in China, compared with several thousands in the US.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: