Walmart reviews China management after scandal

Walmart reviews China management after scandal

RETAILER NEWS

IOL Business - Oct 26th 2011, 09:13

Bloomberg Shanghai

Walmart is reviewing management procedures in China as it reopened outlets in Chongqing after officials ordered all 13 of them shut for two weeks for mislabelling ordinary pork as organic. 

The world’s largest retailer had doubled efforts to improve operations and needed to review management procedures across China, Del Sloneker, the chief operating officer of Walmart China Hypermarket, said yesterday.

He also apologised for the mislabelled pork cases but did not say how much the review or other steps would cost the global retailer.

Walmart Asia chief executive Scott Price, who took control of China operations earlier this month, visited some stores in Chongqing as China’s second-biggest operator of hypermarkets seeks to regain consumer goodwill lost in the pork labelling scandal.

Walmart was fined and ordered to halt operations at the 13 stores, while police detained 37 employees, the most severe punishment of the US-based retailer since entering China in 1996.

“If Walmart does correct its mistakes and improve, we still believe it’s a good company and will keep shopping there,” said Rong Xuehua, who lined up outside a store in Chongqing at 7.45am for an 8am opening.

“Ordinary people in Chongqing don’t have much money. You get good value for money at Walmart.”

Price had apologised to Chongqing mayor Huang Qifan, promising to correct the problems, the company’s spokeswoman, Christina Lee, said last week.

Walmart also provided special training for Chongqing employees, upgraded store facilities and would set up a laboratory for fast-quality checks of food at its Chongqing stores, it said.

About 100 people rushed into a Walmart store in the city’s south yesterday when it opened at 7.50am, 10 minutes ahead of schedule.

An apology is posted on the right side of the entrance. On the other side is a sign advertising discounts on more than 60 items, including apples, televisions, soap, milk and pork, until Thursday next week.

The sign at the store had an image of a policeman and the characters for the phrase “safe Chongqing”.

Since 2006, the Bentonville, Arkansas-based retailer has been cited for 21 cases of selling expired or sub-standard food and false advertising in Chongqing city.

The failure to correct violations at outlets in Chongqing over the past five years forced authorities to temporarily halt operations as a warning, Tang Chuan, the director of law enforcement at the city’s Bureau of Inspection and Enforcement, said last week.

Chongqing fined Walmart 3.65 million yuan (R4.5m) after 12 of 13 outlets in the city were found to have sold the mislabelled pork. The retailer has pledged to co-operate with the investigation.

Walmart’s Chinese network has grown to 353 stores from eight in what it forecasts will be the world’s largest grocery market by 2014. The company reported annual revenue of $7.5 billion (R59.2bn) in China last year, about 1.8 percent of total sales worldwide.

Since 2005, Walmart’s market share has more than doubled to 11.2 percent, making it the second-largest supermarket chain in the country behind Sun Art Retail Group.

“We are embarrassed and (we are) going to work harder to ensure that this is not going to happen again,” said Sloneker.