Though many know that many of the products that one buys
from Wal-Mart comes from China, not a lot know about the details and
regulations that go into getting the certain product imported to the United
States. China has become known as the “big prize” (Press). Due to competition challenges
from online Amazon shopping and the dollar stores, offering low prices and
convenience; Walmart cannot count on much sales growth from its U.S. stores.
Therefor the retailer has come to rely on its operations overseas such as China
which is the “big prize” with it being the world’s most-populous country.
Wal-Mart conducting trade business with China has been a bid deal for
the past few years. The global retail store has moved many of its factors to
China to get its hands on cheaper labor cost. Wal-Mart benefits from trading
with China due to employee there being low paid. This then hhelps save Wal-Mart
money in the long run.
policy will always depend on the political culture of the moment” (Williams).
This means anything can change at any given time. Such if the economy in China
were to face financial disaster or a disaster. The government then can change
prices on items to gain more back meaning Wal-Mart prices will also change. This
price change can be for number of reasons as Wal-Mart would need to gain back
what they spent on the product; or gain profit. Having a stable political
system can help make
business easier compared to having
unstable political system.
With China being overly
populated, that comes as an advantage to Wal-Mart. A big population means not
everyone can live in one part of China, which leads to people living in
different provinces. Due to each province having different preference on what
they like Wal-Mart must change some if its items to gain the attention from the
different provinces. For example, “Southern Chinese like rice. Northern Chinese
like noodles. Folks from Hunan like their chili peppers. The Cantonese crave
chicken feet” (Press). With China having the resources to provide each customer
with their preference needs and wants, it brings customers back. With about 400
stores in China they bring in a total of 478.6 billion dollars to Wal-Mart and
with “the Chinese grocery market, already the world’s largest at $1.1 trillion
a year, it is expected to grow to nearly $1.5 trillion in just the next four
In able to succeed in China,
Wal-Mart had to change some of its marketing ways. Though in American customers
looks for the cheapest price possible when shopping that it not how it works in
China. In China, it is quality over price. Price does not matter to customers
in China therefore Wal-Mart, not knowing how to go about that had to give power
to local Chinese Wal-Mart managers how new more about the Chinese market.
Wal-Mart had to change its phrase of “everyday low prices” in China rival
companies started selling products at cheaper prices compared to Wal-Mart. This
left many customers confused, which lead the change of the slogan to
“Worry Free” with the Chinese characters for save, heart, and price
to reassure shoppers that they indeed do get the lowest price possible.
Promotions also had to be changed as “85 percent of discounts in the Wal-Mart
stores in China now last anywhere from four weeks to six months because unlike
in the U.S., Wal-Mart had to build trust by spelling out in signs how long the
low prices last” (Press).
China’s economic development is nothing
to think short of with it being the world’s second-largest equity market it is
also now the world’s largest supplier of manufactured goods. According to an
article found, China is now “the world’s largest supplier of manufactured
goods. China’s second wave came as it grew its infrastructure and became the
world’s largest importer of commodities. And now with the world’s manufacturing
industries and commodity markets transformed” (Capitalizing on China’s third
wave). For those who want to invest in China, such as the retail store Wal-Mart
this comes as both an opportunity and a risk. The question was asked “How can
you capitalize on China’s transformative growth without equitizing its
debt—especially when China’s corporate debt-to-GDP ratio approaches the
pre-crises levels of Spain and Japan?” (Capitalizing on China’s third wave). The
only way is to make sure one knows business and how investments work.
With Wal-Mart being a such broad company that came as a
weakness that the successful retail store must face. For one store to offer so
many different products from toys to household materials, to pharmaceuticals, it
makes it that much harder to focus on one general area. Though offering many
different types of products at once comes as a weakness Wal-Mart is still a cost
leader by being able to provide needs and wants to consumers at the lowest
price possible. To be able to provide low cost to consumers Wal-Mart eliminated
its obstacle of sourcing form high-cost countries, and by “using its large
buying power to negotiate deals with manufacturers and by sourcing many of its
products from low-cost countries like China” (Clark).
AS of now the current mission statement of “Saving people money so they can live better”
and vision statement of “To be the
best retailer in the hearts and minds of consumers and employees” (Ferguson)
stand with Wal-Mart. Although both the mission and vision statement work of American customers,
changes had to be made when Wal-Mart entered in the Chinese marketplace. To
match China’s marketing strategy, as stated in the previous paragraph the two
were simplified to “Worry free” (Press). Though the same store, customer’s in China
look for something different when they shop at their local Wal-Mart compared to
what customer’s in the United States look for. The article stated that customers
in the U.S are “penny-pinching,
bulk-buying customers, but Chinese shoppers have good reason to look for
quality first, bargains second after scandals involving tainted and mislabeled
food” (Press). Due to many food safety regulations, not being met in
China it has become a norm for many to look for freshness first and be
concerned with the price after.
this project it has thought me that China is pretty much the main reason the
United States has products to sell and make money. Though it was already known
to many that most imported goods come from China, this project help deepened
the knowledge. China is the biggest distributor to the United States and have
always been from toys to electronics, they produce it all and ship it over. Another
interesting thing that was discovered while researching was that due to Wal-Mart
moving most of its factories over to China to reduce labor cost, it cost the
United States 400,000 jobs since 2001. Wal-Mart may just be an ordinary store
to most customers but behind it all, there is more to it than just the most
successful retail store.