Today's best read--Sarah Schafer in Newsweek International:
In recent years Beijing had allowed foreign retailers to open stores in China, but only for chains with sales of more than $2 billion. That rarefied global group included only Wal-Mart, Carrefour of France (which Wal-Mart is rumored to be interested in buying) and the Metro Group of Germany. Last week Beijing opened the door to smaller players, and lifted rules that had confined the three giants to a limited number of cities and forced them to work with Chinese partners.Just what will the monster do? Nothing less than revamp the entire Chinese business culture...
Wal-Mart is in effect trying to replace a Chinese business culture built on personal relationships with its own modern supply network, built on information technology. There's a long way to go. For every Huada, there are still many others that don't understand the proprietary software Wal-Mart uses to link with suppliers, and can't stop padding the bills to make room for bribes. Yet many analysts think Wal-Mart can prevail in this culture clash
Posted by Kevin on December, 20 2004 at 04:05 PM
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Dave Meleney wrote:Wow!
Shopping in China has been changing rapidly, a full openness to WalMart and Home Depot will send it all into hyperspeed. When I was doing small home repairs there 15 years ago I had to go to an amazing number of shops to get a few plumbing items. Most stores were manned by listless government employees who'd often say: "Mayo" (we don't have any) to any request, even when the goods were right in front of you. And where the private stores were very eager to please but wouldn't think of western habits like standing behind their products. Someone spending half a years salary on a bike better check it out very, very carefully...
Now they are jumping fully into a competitive model where exchange doesn't require establishing personal relationships, where every ounce of fat is constantly being pared from the distribution process, and where the producer knows what products left the store shelves that very night.
A culture that has largely skipped the wired phone and gone straight to cell technology, that is producing several times the engineering graduates of any other country in the world, and that now is mainlining Sam Walton's urgently efficient ethos is soon going to be coming up with hi tech innovations that revolutionize the way our children live. Instead of getting SARS and new forms of flu from Guangdong province, we'll be getting cutting edge biotechnology and cars that don't have accidents. No wonder that Ford Motor and Kay Jewelry, are starting to worry that WalMart may do to them what it did to Toys-R-Us. The true nature of the revolution is starting to become more evident.-- December 22, 2004 01:23 PM ∞
Shawn McNaughton wrote:While I don't believe Wal-mart to be some incredible force of justice, I do believe that this can and will be a good thing.
Essentially, Wal-mart offers certain levels of service. While in many ways it can be considered a drain on the 'American Way of Life', the story is different in China. China is finally catching up with the 'modern' world.
As Dave pointed out, this may well bring some firm commitments to quality to China. After all, if I'm an American traveler, go to a Chinese WM (or WM-owned store), and have a bad experience, Wal-mart loses.
This could even have a ripple effect in the US. Let's take Dave's bike example. If WM stands behind their low-cost bikes in China, then other retailers cannot sell low-quality bikes. As a result, manufacturers must raise quality standards, which in turn will also likely improve the quality of US products, although it may raise prices because of the creation of new jobs and better materials.
All in all, this is a development I want to see. I want to experience it. I believe that WM may successfully be able to improve China's dynamic yet low yield economy.
-- December 27, 2004 08:50 AM ∞
