Page 290 - 2017 White Paper
P. 290
7 White Paper on the Business Environment in China
“Chinese government bodies and state-owned firms pork in some stores. Two employees were arrested,
are usually too sensitive to investigate, putting foreign another 35 were detained, and the company was fined
companies in the firing line for hard-hitting corporate 2.69 million yuan” (Li 2012).
stories”, experts told Reuters (Rajagopalan 2013).
At roughly the same time, “more than 100 Tesco
Retail employees went on strike in eastern China. The
employees blockaded and prevented shoppers from
While foreign investment by major multinational entering a Tesco store due to a labor dispute” (Li 2012).
corporations looks to remain strong, vagaries in
franchising law may provide a hurdle to small- and One question that remains unaddressed in many
medium-sized enterprises looking to enter China, even Mainland reports of foreign supermarkets’ troubles is
as growth in consumer spending ability and a projected that of culpability; determining if wrongdoing has had
150 million new urban consumers by 2015 (Beebe 2007) the tacit support of more senior executives or has rather
reinforce China’s importance as a strategic location been the work of greedy “rogue actors” at the individual
globally. store level seems to be left as an exercise for the reader.
Foreign retailers’ Mainland experiences have been Still,Wal-Mart’s Foreign Corrupt Practices Act violations
mixed in recent years. in Mexico — and the ensuing investigations which may
unearth further violations in China — would seem to
Home Depot, purveyors of home improvement suggest that at the very least these companies might
supplies, closed seven stores in China over the course benefit from investment in more extensive corporate
of 2012, incurring “an 11-cent charge” to its earnings per ethics training worldwide (Cassin 2013).
share (Geller 2012).
The situation has not lately improved for the embattled
Meanwhile, “Wal-Mart said store traffic in China retailers.
declined again [in Q3 2012]” (Valetkevitch 2012).
By 2013 Tesco had begun to “shut Chinese outlets and
Wal-Mart, “the world’s largest retailer by sales revenue, open new ones more slowly two years after announcing
entered China in 1996”, “nine years later […] had more plans to double stores and build more 400,000-square-
than 70 stores” and as of mid-2012 “[had] more than foot malls”, writes Bloomberg Businessweek. “Hindered by
376 outlets and more than 95,000 employees in China” the country’s slowest economic growth since the 2009
(Xinhua 2016). financial crisis and competition from local markets and
regional chains, the Cheshunt, England-based retailer’s
Carrefour and Tesco, the world’s second- and third- China same-store sales declined 1 percent in the second
largest retailers by revenue, had 206 and 111 stores in quarter” (Bloomberg Businessweek 2012).
Mainland China, respectively (Xinhua 2016).
“Tesco’s China pullback reflects the hurdles global
Foreign supermarkets, especially, have seen difficulties big box retail chains face in Asia”, the article continues,
arising from pricing, misrepresentation and employee “where the realities of complex local markets and slowing
disputes. economies are damping dreams of easy expansion. The
world’s largest retailer, Wal-Mart, is also adding outlets
In January 2011, the NDRC “fined 11 Carrefour stores more gradually than it had planned in China’s 3.5
in six cities 500,000 yuan ($78,440) each for overcharging trillion yuan ($560 billion) grocery industry” (Bloomberg
customers” at the same time that “some Wal-Mart stores Businessweek 2012).
were also caught using illegal pricing methods” (Xinhua
2016). Whether more or less gradually, Wal-Mart recently
announced plans to open “up to 110 facilities in China
Issues persisted, however. In October 2012, “Wal-Mart between 2014 and 2016, in addition to the 30 it has
closed more than a dozen stores in Chongqing following already opened [2013]”. The company also plans to “profit
allegations that it had labeled regular pork as organic from China’s changing retail landscape by embracing
e-commerce”. A major component of that strategy is
290
“Chinese government bodies and state-owned firms pork in some stores. Two employees were arrested,
are usually too sensitive to investigate, putting foreign another 35 were detained, and the company was fined
companies in the firing line for hard-hitting corporate 2.69 million yuan” (Li 2012).
stories”, experts told Reuters (Rajagopalan 2013).
At roughly the same time, “more than 100 Tesco
Retail employees went on strike in eastern China. The
employees blockaded and prevented shoppers from
While foreign investment by major multinational entering a Tesco store due to a labor dispute” (Li 2012).
corporations looks to remain strong, vagaries in
franchising law may provide a hurdle to small- and One question that remains unaddressed in many
medium-sized enterprises looking to enter China, even Mainland reports of foreign supermarkets’ troubles is
as growth in consumer spending ability and a projected that of culpability; determining if wrongdoing has had
150 million new urban consumers by 2015 (Beebe 2007) the tacit support of more senior executives or has rather
reinforce China’s importance as a strategic location been the work of greedy “rogue actors” at the individual
globally. store level seems to be left as an exercise for the reader.
Foreign retailers’ Mainland experiences have been Still,Wal-Mart’s Foreign Corrupt Practices Act violations
mixed in recent years. in Mexico — and the ensuing investigations which may
unearth further violations in China — would seem to
Home Depot, purveyors of home improvement suggest that at the very least these companies might
supplies, closed seven stores in China over the course benefit from investment in more extensive corporate
of 2012, incurring “an 11-cent charge” to its earnings per ethics training worldwide (Cassin 2013).
share (Geller 2012).
The situation has not lately improved for the embattled
Meanwhile, “Wal-Mart said store traffic in China retailers.
declined again [in Q3 2012]” (Valetkevitch 2012).
By 2013 Tesco had begun to “shut Chinese outlets and
Wal-Mart, “the world’s largest retailer by sales revenue, open new ones more slowly two years after announcing
entered China in 1996”, “nine years later […] had more plans to double stores and build more 400,000-square-
than 70 stores” and as of mid-2012 “[had] more than foot malls”, writes Bloomberg Businessweek. “Hindered by
376 outlets and more than 95,000 employees in China” the country’s slowest economic growth since the 2009
(Xinhua 2016). financial crisis and competition from local markets and
regional chains, the Cheshunt, England-based retailer’s
Carrefour and Tesco, the world’s second- and third- China same-store sales declined 1 percent in the second
largest retailers by revenue, had 206 and 111 stores in quarter” (Bloomberg Businessweek 2012).
Mainland China, respectively (Xinhua 2016).
“Tesco’s China pullback reflects the hurdles global
Foreign supermarkets, especially, have seen difficulties big box retail chains face in Asia”, the article continues,
arising from pricing, misrepresentation and employee “where the realities of complex local markets and slowing
disputes. economies are damping dreams of easy expansion. The
world’s largest retailer, Wal-Mart, is also adding outlets
In January 2011, the NDRC “fined 11 Carrefour stores more gradually than it had planned in China’s 3.5
in six cities 500,000 yuan ($78,440) each for overcharging trillion yuan ($560 billion) grocery industry” (Bloomberg
customers” at the same time that “some Wal-Mart stores Businessweek 2012).
were also caught using illegal pricing methods” (Xinhua
2016). Whether more or less gradually, Wal-Mart recently
announced plans to open “up to 110 facilities in China
Issues persisted, however. In October 2012, “Wal-Mart between 2014 and 2016, in addition to the 30 it has
closed more than a dozen stores in Chongqing following already opened [2013]”. The company also plans to “profit
allegations that it had labeled regular pork as organic from China’s changing retail landscape by embracing
e-commerce”. A major component of that strategy is
290
