How Big Is Walmart’s China Problem?

Walmart
WMT
is used to being a bit of a whipping boy in the American market, the largest retail company in the country and a target for protests about everything from wages to social issues to environmental policies.

But now it’s starting to face similar treatment in its largest overseas market, China. Over the past few months, the Chinese government – and Chinese citizens influenced by nationalistic rhetoric – has been attacking Walmart on multiple fronts in what at least from outward appearances appears to be an orchestrated campaign to intimidate the giant retailer.

The latest move came just a few days ago when the Chinese Bureau of Market Regulation in the city of Chengdu said it was launching an investigation into Walmart’s local Sam’s Club store over food safety issues. According to the Wall Street Journal, “the probe follows consumer complaints, about spoiled beef, the regulator, a local branch of China’s top market watchdog, said.” Walmart did not respond to a Journal request for comment, the newspaper said.

This probe is just the most recent in what is a building series of attention Walmart is getting from Chinese authorities in response to the retailer’s apparent step to stop selling products made in the Xinjiang region of China. That’s where U.S. and other global concerns have said China has detained hundreds of thousands of local, mostly Muslim citizens as part of what outsiders are calling an “assimilation” strategy. China denies the allegations. The U.S recently enacted a ban on all products made in that area, which is China’s largest cotton growing region and is a large exporter of apparel and home textiles goods.

Walmart has not commented on any of these developments in China, which also included the unusual step of state media calling attention to a $50,000 fine against the company last year.

Walmart first entered the China market in 1996 and now has around 425 stores in the country under the two nameplates. For the most recent year numbers are available, Walmart did $11.43 billion in annual revenue in the country, placing it second to only Mexico and Central America – where it operates more than 2,700 units under a variety of nameplates and did $32.6 billion last year – in units outside of the U.S. and Canada. Walmart recently sold its Asda division in the U.K. and has exited most other overseas marketplaces, including Brazil, Japan and Germany.

Overall, the company, the world’s largest retailer, did about $559 billion in sales last year, but it has counted China as one of its few foreign success stories. So with these recent skirmishes with China’s president Xi Jinping’s newly aggressive stance on many global issues, Walmart’s position in the market there is getting ever more troubling.