11.1 Section Title
Chapter 11 HEADLINE: Wal-Mart Orders Chinese Suppliers to Lift Standards
In response to criticism from activists in the United States, Wal-Mart has established strict labor and environmental standards that its overseas suppliers must follow. This article reports on these standards for factories in China.
Wal-Mart, the world’s biggest retailer, yesterday told its Chinese suppliers to meet strict environmental and social standards or risk losing its business. “Meeting social and environmental standards is not optional,” Lee Scott, Wal-Mart’s chief executive, told a gathering of more than 1,000 suppliers in Beijing. “A company that cheats on overtime and on the age of its labour, that dumps its scraps and its chemicals in our rivers, that does not pay its taxes or honour its contracts will ultimately cheat on the quality of its products.”
Wal-Mart has been pursuing a drive to improve its reputation on environmental and social issues over the past three years in response to growing criticism in the US over issues that include labour conditions in its supplier factories… . The requirements include a clear demonstration of compliance with Chinese environmental laws, an improvement of 20 per cent in energy efficiency at the company’s 200 largest China suppliers and disclosure of the names and addresses of every factory involved in the production process. The company will require a 25 per cent rise in the efficiency of energy-intensive products such as flat-screen TVs by 2011.
Source: Excerpted from Tom Mitchell and Jonathan Birchall, “Wal-Mart Orders Chinese Suppliers to Lift Standards,” The Financial Times, October 23, 2008, p. 19. From the Financial Times © The Financial Times Limited 2009. All Rights Reserved.
Question
Wal-Mart receives a lot of criticism for their labor and environmental practices abroad. Does the approach outlined herein appropriately and fairly address these concerns? Why or why not?
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Answers will vary. Opinions of Wal-Mart tend to be strong which may shape students’ responses.
Question
Do Wal-Mart demands seem feasible for overseas suppliers to implement? Why or why not?
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The changes Wal-Mart announces could be costly and the article doesn’t mention who will foot the bill for these changes. If overseas suppliers are to pay for the changes it could be an expensive endeavor for them, equivalent to footing the bill for changes principally established to improve Wal-Mart’s image. On the other hand, if Wal-Mart funds these changes it could have a measurable impact on both labor rights and the environment.