Chinese Media Claims Wal-Mart Is Violating Laws To Boost Profits

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Wal-Mart Stores, Inc. (NYSE:WMT) doesn’t get much love these days. The world’s largest retailer, with over 11,000 retail outlets in 15 different countries and a supply chain that crisscrosses the globe, is frequently the target of labor unions, governments, civic society groups, and other parties. Now, China’s state-owned media is accusing the company of violating permits and other laws in an effort to boost profits.

Wal-Mart Stores, Inc. (NYSE:WMT) and China have long held a symbiotic relationship. Wal-Mart was one of the most aggressive companies in outsourcing to China and help open the flood gates of cheap Chinese-made goods to the West. At the same time, Wal-Mart was able to leverage China’s lower production costs in order to gain a competitive advantage over its rivals. Wal-Mart also has some 400 stores in China itself.

As the recent spat between the company and the country highlights, however, the relationship hasn’t always gone smoothly.

China Central Television lobs accusations at Wal-Mart

State-owned China Central Television now claims that Wal-Mart Stores, Inc. (NYSE:WMT) has been bypassing quality, trade, and food permits. The news agency claims that 200 different company documents show some 600 different products being sold without the proper permits. The agency also claims that Wal-Mart buys products from unlicensed retailers.

Increasingly, China’s state-owned news agencies have been targeting private companies in “name-and-shame” campaigns. In recent months, Apple Inc. (NASDAQ:AAPL), Volkswagen AG (ETR:VOW) (OTCMKTS:VLKAY), Starbucks Corporation (NASDAQ:SBUX), and others have all been targeted by state-owned news agencies for various reasons. Starbucks, for example, was blasted for charging Chinese customers higher rates than customers in other countries.

CCTV is one of the most widely watched channels in China, and is widely viewed as the government’s most powerful propaganda arm.

Wal-Mart defends practices

Wal-Mart Stores, Inc. (NYSE:WMT) is not taking the accusations sitting down. Given how important China is to the company, it’s likely that it will work hard to maintain a good image in the country. Wal-Mart has stated that it has “accelerated approvals” for products under special circumstances. The company said, for example, that it would accelerate the process for bringing products to the shelf in the case of quantity and service size changes.

Wal-Mart Stores, Inc. (NYSE:WMT) has also come under fire for other issues. In 2013, the company was criticized after fox DNA was found in donkey meat being sold in stores. The company has promised to start DNA testing of its meats and will work to more closely monitor its meat supply chain.

Wal-Mart Stores, Inc. (NYSE:WMT) claims that it has been working diligently to comply with all relevant laws, and that customer safety is a high priority for the company.

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