Walmart Business Practices Bad for America

[Guest Husker Du]

So Wal-Mart is going to sell bonds in China now? Don't you have to be a bank, or some kind of "serious" financial institution to "sell bonds?"

Can Isell bonds in China??

 

Husker Du

 

PS I love the idea of "USmart."

[Guest China Labor Watch]

Wal-Mart outsources production to around 100,000 supplier factories around the world, tens of thousands of which are located in China . Wal-Mart's own estimates point out that given the $18 billion the company spent on products from China in 2006, if Wal-Mart were to be considered a sovereign nation in that year it would be China 's fifth largest export market. Wal-Mart not only manufactures products in the country, but has also made a major retail push there, selling the products of Chinese labor back to middle class Chinese consumers. Wal-Mart had 267 (Trust-Mart Hypermarkets 104) retail stores in China as of October 31, 2009, Today, this number continues to grow.

 

Given the massive scale of Wal-Mart's operations in China , the limited number of factory investigations that CLW is able to conduct in a single year is particularly striking. The current report, which focuses on labor violations in five factories across a wide range of industries, attempts to illustrate systematic violations cited in Wal-Mart's supply chain.

 

II. Challenges to Wal-Mart's Ethical Sourcing

 

Wal-Mart has pledged to increase sustainability in recent years. The Ethical Standards team has rolled out a number of reforms to its sourcing policies, promising to revamp Wal-Mart's factory audit system, create higher standards for supplier factories and offer more capacity-building support. Despite these policies, CLW investigations of randomly-selected Wal-Mart suppliers routinely identified their failure to implement even Wal-Mart's most basic standards. While Wal-Mart's Ethical Standards team has responded enthusiastically to help individual factories implement remediation plans, there is no evidence of systematic improvement. Given the tens of thousands of Wal-Mart suppliers in China , one-at-a-time improvement is inadequate.

 

CLW met with Wal-Mart's Ethical Standards team in New York on September 30 and October 1, 2009. CLW Executive Director Li Qiang described systemic challenges facing Wal-Mart's supply chain and raised the following concerns:

 

• Wal-Mart pricing is too low. As the world's largest retailer, Wal-Mart leverages its huge orders to convince factories to sell goods at low prices that are not sustainable. This puts pressure on other brands to pay less, thereby setting a dangerous industry precedent. In conversations with CLW, both factories and other brands frequently cite Wal-Mart's pricing structure as a major source of financial pressure.

 

• Wal-Mart's audits systematically fail to identify all labor violations. Although Wal-Mart has only worked with third party auditors since April, some auditors have a history of corruption, which allows violations to go undetected. After failing two Wal-Mart audits, factories may bribe auditors on the third audit to avoid losing Wal-Mart orders. Auditors lacking experience will often fail to identify issues or realize when they are being tricked. Possible solutions to this problem include supplementing Wal-Mart's internal audits with external monitoring, making more stringent requirements for “orange” factories and extending the three “orange” limit to three years.

 

• Wal-Mart's corporate structure needs to focus on real change and not on image. CLW has found that Wal-Mart routinely turns a blind eye to poor conditions in supplier factories unless investigations are made public. Furthermore, even after an initial surge of activity following a report, factories investigated by CLW often revert to their original violations within one or two years. Wal-Mart has basic standards that it must enforce. It has the size and power to be an industry leader; Ethical Standards Program initiatives alone, however, will not result in the real change unless Wal-Mart's core corporate practices are addressed and revised. This will entail increased investment in the audit system and careful review of purchasing practices.

 

• Wal-Mart needs more transparent ethical sourcing efforts. First, it should be transparent about its response to allegations of violations in its supply chain and publicize steps taken to remediate factories. Changes to conditions in these factories and verification of improvements should also be made public. Second, Wal-Mart should clearly communicate the specific challenges facing its system and how new policies are to target such challenges.

 

III. Overview of Typical Violations

 

The current report focuses on five Wal-Mart supplier factories that produce goods including decorations, shoes, tools, paper boxes and curtains. Investigations were conducted through external interviews, in which CLW investigators questioned factory workers about conditions inside. This investigative structure allowed the investigators to bypass fraudulence that is oftentimes endemic to the audit process. In fact, CLW found evidence of institutionalized procedures for audit fraud at two of the five factories. Earlier this year, CLW published a report documenting extensive audit fraud at another Wal-Mart supplier.

 

Of the five factories included in the report, three were factories CLW had previously investigated. Given the impact of the economic crisis on the manufacturing industry, there was little improvement at any of these factories—workers at each faced long overtime hours and increased performance expectations in the pre-holiday peak production season. Moreover, conditions at the five suppliers represent typical forms of abuse that occur across Wal-Mart's supply chain:

 

Contracts

 

Since the enactment of the 2008 Labor Contract Law, factories have gotten better at signing contracts with workers and providing them with individual copies (even if they do not subsequently follow the terms outlined in the contracts). Nevertheless, Dashing failed to provide copies of the contract to all workers. Workers at both Dashing and Stanley described difficulty quitting. When a factory refuses to process workers' applications for resignation, workers will often work until their last month's pay check is issued, thereby losing several days of wages at the beginning of the new month.

 

Recruitment and Hiring

 

Many factories have preferential hiring for women. This policy is institutionalized as a discriminatory hiring practice at Fan Chang, where males are only hired if accompanied by two females. Other factories discriminate based on different criteria: hiring at Stanley gives preference to workers from certain geographic areas and recruits reported being turned away because of their home province. At Ever Rite, pregnant women need not apply.

 

Wages and Working Hours

 

The most severe violations occur in the areas of wages and working hours. All 5 factories entered the busy season in September, and as a result, overtime increased to at least 3 hours/day, plus Saturdays and most Sundays, and total overtime at the factories ranges from 100-140 hours/month. Because China 's legal overtime limit is only 36 hours, factories very routinely break the law, therefore violations are particularly excessive.

 

The most severe overtime occurs at Dashing, where workers are sometimes required to work for 24 hours consecutively, from 8 AM one morning to 8 AM the next morning. After breakfast on the second day, they are expected to return to work. And overtime at Dashing is illegally underpaid at only $0.44/hour, less than half the legal limit! At Ever Rite and Dashing, overtime wages are deducted when workers fail to meet production quotas. At Wing Fat, workers are only paid for 3 hours of overtime/day, and if actual overtime hours exceed this limit, these hours will be paid as regular wages. In addition, if workers cannot work overtime once, they will be denied further overtime opportunity for the remainder of the month.

 

In addition to manipulating overtime, factories reduce costs in other ways. At Stanley , the factory makes sure it gets maximum working time by requiring workers to punch in 20 minutes before they are schedule to start work and 20 minutes after it ends, and this is time that should be scheduled for lunch or rest. At Ever Rite, the factory denies workers the right to purchase social security insurance, minimizing costs at the expense of workers' peace of mind in their old age. Fining workers can directly reduce wages: at Dashing, a worker who is absent for more than half a day or who drinks alcohol in the dormitory will have nine days worth of wages deducted. Stanley also has 74 punishable violations to reduce worker salaries and Ever Rite also implements fines, although recently punishment has more often taken the form of verbal abuse.

 

Living Conditions

 

Living conditions at the factories are uniformly poor. At Dashing, bathrooms have no running water (workers must carry in buckets of water to flush the toilets). Canteen food and sanitation is poor, but since the canteen fees are deducted from workers' wages regardless if they eat, many do. At Fanchang, meals are free therefore many workers eat in the canteen in spite of poor sanitation and portions so small they will still be hungry after. At Stanley , canteen food is worst for night workers, who also receive no subsidy and therefore feel that this poor treatment is particularly unfair. At Wing Fat, food is also poor but workers at the very least have the ability to leave the factory for meals.

 

Working Conditions

 

All five factories have a number of safety issues, however, overall performance is better at some than others. Safety begins as soon as workers are hired, and training at the factories ranges from none at all at Wing Fat to three days at Ever Rite. Stanley , which offers 2 days of safety training, has a strong safety program and even established a group devoted to improving safety performance. Stanley provides masks and earplugs to workers, yet denies workers gloves on the grounds that this will slow down production, and workers also complain of intense heat in the workshop. Workers at Wing Fat are also denied gloves and swelter in the heat. Workers complain of strong smells in the workshop at Fanchang and overall messiness at Ever Rite.

 

Audit Falsification

 

In addition to these clear violations of the law, managers of these factories actively work to prevent Wal-Mart from discovering failures to meet Wal-Mart standards. At Wing Fat and Dashing, the factory falsifies information and asks workers to lie during factory audits. At Wing Fat, records are hidden and an entire area of the factory is blocked off. At Dashing, workers sign false pay stubs and memorize cheat sheets to deceive clients. This practice not only demonstrates disrespect to workers by forcing them to lie on the factory's behalf, it also prevents Wal-Mart from acknowledging labor violations at the factories and working with them to make improvements.

 

http://www.chinalaborwatch.org/walmart.htm

[Guest Derek]

Walmart makes disgusting comment about black people. Are we headed back to the 60's?

 

[Guest greenzen]

It appears from this article that Indians are starting to distrust Walmart.

 

http://www.ndtv.com/news/india/how-wal-marts-wooing-indian-farmers-19777.php

 

At first glance, the vegetable patches in this north Indian village look no different from the many small, spare farms that dot the country. But up close, visitors can see some curious experiments: insect traps made with reusable plastic bags; bamboo poles helping bitter gourd grow bigger and straighter; and seedlings germinating from plastic trays under a fine net.

 

These are low-tech innovations, to be sure. But they are crucial to the goals of the benefactor - Wal-Mart - that supplied them.

 

Two years after Wal-Mart came to India, it is trying to do to agriculture here what it has done to industries around the world: change business models by using its hyper-efficient practices to improve productivity and speed the flow of goods.

 

Not everyone is happy about the company's presence here. Many Indian activists and policy makers abhor big-box retailing, fearing that it will drive India's millions of shopkeepers out of business. Some legislators are suspicious of the company's motives. The government still does not allow Wal-Mart and other foreign companies to sell directly to consumers.

[Guest Jill Cashen]

Walmart needs to make certain their suppliers are not stealing from their employees. Factories in Bangalore, India that make clothes for Walmart and other apparel companies have refused to pay the legal minimum wage to approximately 125,000 workers since the minimum wage was increased one year ago, according to a report released today by the Worker Rights Consortium and being touted by United Student Against Sweatshops.

 

According to the report, the factories owe the workers more than one month's back pay and citywide, the Bangalore apparel workforce is owed more than $10 million dollars.

 

Walmart's South Asia procurement and vendor compliance operations are headquartered in Bangalore and the company is a major purchaser from one of the biggest offenders cited in the report.

 

Walmart says it requires compliance with local laws, including minimum wage laws, in its Standards for Suppliers and audits factories which export to Walmart as part of its Ethical Standards Program.

 

This information follows reports of Walmart's failure to promote even the most basic of labor standards in supplier factories in China as detailed in a November 25, 2009 China Labor Watch report.

 

As the largest retailer in the world, Walmart has set the moral low ground when it comes to making sure the factory workers who produce the goods sold in their stores are properly paid for their work. It is especially telling that such ethical violations take place in the backyard of their regional compliance office.

 

We call on Walmart to ensure that the workers in the Bangalore factories where their products are produced are immediately paid the back wages they are owed.

 

Any 'ethical standards' program that Walmart has talked up is clearly just public relations and doesn't reflect their business practices. That Walmart has chosen to ignore minimum wage law in India demonstrates a larger pattern of trampling on workers' rights on a world-wide scale.

 

http://www.wakeupwalmart.com

[Guest NJmikeV]

Poison in dog food. Lead in babies toys. Toxins in drywall. Unemployment in the U.S.

 

In our drive for low prices we have sacrificed much.

 

I fear there is more to come.

 

Wal-mart is a place for scabs, misogynists, and racists to shop to enrich China and ruin America's economy.

[Guest Sato]

Why doesn't the Obama administration try to convince Walmart to buy American? Seems a no brainer.

[Guest Chessman]

I love this Henry Rollins video about Walmart. Do you commit Walmart? HA!

 

[Guest Murray M]

This Wal-Mart debate is very complex: how do you convince people to spend more money when they cannot see instant benefits? True, they are saving money in the short term, but at the cost of the security of their children's future. It is an example of the instant gratification society we live in ... for better or for worse.

 

Still, I think there will be a major backlash against the retailing giant in the not too distant future.

[Guest Wahahaha]

People do not care about corporate facism. They just want alot of food to microwave into their big bellies. People do not care where their XBox is made. They just want to sit on their couch and pretend to be someone they are not. Chinese work harder for money than Americans. Walmart life in China is temporary until we gain infrastructure. It is just life. Enjoy or come to our country and learn to work.

[Guest Eric]

Let's get real here. Wal-Mart Supercenters have a positive welfare effect on price-sensitive consumers. Should a company be penalized for being more successful than its competition? You liberals can go to your Co-Ops and munch on your granola bars.

[Guest Enron Ex]

Wal-Mart's uncanny ability to develop cultural solutions that filter out the very crisis that its business model producing to our economy. Just look at the media they are selling to their Walmart Nation of customers and where their donations are going.

[Guest Smokescreen]

The hidden story is the pressure the biggest retailer relentlessly applies to its suppliers in the name of bringing us "every day low prices."

[Guest Truthseeker]

U.S. consumer buying power is slowly fading as Wal-mart erodes American industry and slowly eats away at our middle class.

[Guest bush whack]

What people don't get is the TAX ramifications of buying elsewhere. When a US employee gets a paycheck, the taxes taken out of his/her check are used to support his/her local/state/federal roads/bridges/schools/military. By off-shoring your money (buying Chinese), you are _permanently_ sending your money to that country... supporting THEIR local/state/federal roads/bridges/schools/military.

 

This is minuscule when compared to off-shoring (or "best shoring" as big companies like to spin it) an American job. When a US worker receives a paycheck, what happens? Well, part of the pay is taken to support our roads/bridges/schools/military. The other part is either spent (at local grocers, retailers, restaurants, entertainment venues) or saved (at a local, state or federally sized bank). THOSE ACTS SUPPORT OUR ECONOMY AND OTHERS WHO LIVE BESIDE US. However, when that paycheck is instead sent off-shore, someone elsewhere is seeding that money into THAT economy.

[Guest RYUMSH]

Walmart Stores Inc is not just the world’s largest retailer, but the world’s largest company as well – bigger than ExxonMobil, General Motors, and General Electric. And with its size and profits come privileges: being as powerful as it is, Walmart has no need to negotiate with suppliers and is in a position to pressure them to make products more cheaply. This puts tremendous pressure on wages and salaries, causing manufacturing jobs to be moved overseas. According to internet sources, up to 70% of commodities sold at these “Super” Centers are imported into the United States directly from Asia. Which in its turn promotes existence of illegal workshops, where, in defiance of Walmart’s factory inspection program, workers face exploitation in appalling work conditions. I doubt Chinese people are “super” excited about the opportunity to increase the number of those sweatshops.

 

http://www.ryumsh.info/the-high-cost-of-low-price-685.html/

[Guest Ken]

Wal-Mart has regained its position as number one on the annual Fortune 500 list. There is no stopping them.

[Guest Unemployed]

What happened to Wal-Mart's "Buy American" Program?

 

"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."

– Sam Walton, Wal-Mart Press Release, 3/13/85

 

In 1985, Sam Walton Implored Fellow Retailers, Suppliers and Manufacturers To Buy American. In an effort to combat the growing trade deficit, Sam Walton wanted to show that Wal-Mart was committed to being a steward of the American economy. 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.” [Wal-Mart Press Release, 3/13/85]

 

Walton Was Deeply Concerned About the Trade Deficit. Walton’s decision to promote the “Buy American” program was based upon facts learned between 1981 and 1984. At that time, the trade deficit had shot up 78 percent to $123.3 billion. By the mid-1980’s, Wal-Mart was buying five percent of it products from overseas manufacturers and they wanted to reduce this number by as much as possible. David Glass, the former President of Wal-Mart, expressed his thoughts on his company and its responsibility to the United States. “As a company, we are tremendously concerned with the trade deficit,” Glass said. “We see a tremendous erosion of manufacturing jobs in this country as manufacturers accelerate the movement to go offshore to make their goods. None of us will believe what this country will be like five to 10 years from now if we continue to let this happen.” [Washington Post, 4/21/85]

 

Sam Walton Letter to 3,000 Manufacturers Promised Commitment to Buy American Goods. During the 1980s, Wal-Mart was still trying to rise to the top of the retail market and the move to buy products from American manufacturers was unique. Wal-Mart’s policy was described by the New York Times as “swimming against an awesome tide.” In February 1985, Walton wrote to 3,000 American manufacturers and wholesalers telling them that the chain wanted to buy more American goods. “Our continued success depends on our mutual reaction to a very serious problem with regard to our balance of trade deficit,” [New York Times, 4/10/85]

 

Wall Street Applauded Wal-Mart Move to Protect American Jobs

 

“He [sam Walton] has a leadership role in American retailing,” said Walter Loeb, a retail industry analyst at Morgan Stanley & Company. “He’s somebody coming out and saying, ‘Hey, we don’t have to buy everything from the Far East.’ I think this is the beginning of a major drive of American retailers to buy American products.’’

– Walter Loeb, Morgan Stanley & Company, New York Times, 4/10/85

 

“What Wal-Mart is doing follows in the footsteps of Henry Ford,” proclaimed A. Gary Shilling, an economic consultant in New York. “Ford said that if you don’t pay your workers enough, they are not going to be able to buy Fords.

– A. Gary Shilling, an economic consultant, New York Times, 4/10/85

 

Wal-Mart Claimed To Have Saved American Jobs From Going Overseas. At the beginning of the “Buy American” program, Wal-Mart claimed it was saving $200 million from being sent overseas by investing in local manufacturers. As a result, 4,500 jobs were being created or protect because of their pro-American policies. [Washington Post, 2/15/86]

 

Wal-Mart Literature Touted Commitment to American Manufacturers. In 1994, promotional literature from the company titled “Bring It Home To The USA” continued to tout its commitment to American manufacturers. The brochure, signed by former President David Glass, claims, “the Buy American program is both a commitment and a partnership.” [Wal-Mart Literature, 1994]

[Guest Derek]

We all were duped by one of the biggest scams of all time.

[Guest Stan]

Yup. All they care about is money. Shoppers be damned.

[Guest Ron]

News from the official website of China's Ministry of Commerce is that the international retail giant Wal-Mart has set up a new wholly-owned subsidiary in Hebei, China, in an effort to further expand and localize its operations. This move is reportedly designed to help Wal-Mart's smooth expansion and localization of Wal-Mart in China. Wal-Mart arrived in China in 1996, launching a supermarket and Sam's Club in Shenzhen, followed by neighborhood markets. In February 2007, the retailer invested in hypermarket chain Trust-Mart, which operates more than 100 retail units. Since 2009, Wal-Mart has set up more than ten wholly-owned subsidiaries in Chinese cities and province. However, the complicated operating processes slowed down the retailer's expansion. With the help of these new subsidiaries, Wal-Mart opened nearly 40 new outlets in 2009 and the total number of Wal-Mart stores in China exceeded that of its competitor Carrefour for the first time.

 

An insider from Wal-Mart revealed to the local media that the company will continue to speed up its expansion in China in 2010 and in the future the Chinese market is expected to have the most Wal-Mart stores worldwide, exceeding even its domestic American market.

[Guest greenzen]

Wow. More Walmart stores in China than the United States. This should be a major news story.

[Guest Kentucky Chuck]

I am willing to bet the actions of Walmart are going to force our government to repeal minimum wage to compete with the rest of the world.

[Guest Penn]

You people might as well be shouting in a cave. Walmart has too much political clout to ever be touched by antitrust. The days of your parents democracy is over. Welcome to corporate facism.

[Guest Luke]

I disagree completely. The best way to break a company like Wal*mart down is to fight it and attack it little by little, and enjoy the small victories but keep fighting Wal*Mart propaganda of gluttony, and instant gratification. If people start associating Walmart as anti-America people will start to rise against them and shop somewhere else. Sam Walton would have fired the people running his company now.