I'm having a lively discussion over at Veritas et Venustas; my insistence that it's not possible for 70% of Wal-Mart's merchandise to be made in China has not received a warm welcome. The 70% figure was only tangential to the actual point of the post (which I agree with), that WM's "green" store is not as green as WM would like us to believe.
I once bought the 70% figure wholesale too, and I don't blame others for it. Thanks to Bob for concisely summing this up:
Besides, how can 70% of their products be made in China when they only account for something like 15 billion of imports from there. Possible yes, likely, no. That would mean that 30% of their goods accounts for 90% of cost of goods sold.
And thanks to The Box Tank for pointing us to the post.
Posted by Kevin on July, 26 2005 at 10:27 AM
Bob wrote:How clueless is that guy? You don't do research? Anybody with any sense would realize how fucked up these numbers are.
-- July 27, 2005 10:36 PM ∞
john massengale wrote:Some reasonable comments have come up, that you ignore. Your comment? "How clueless is that guy? ... "fucked up." Nice expertise.
-- July 27, 2005 11:18 PM ∞
Bob wrote:I read through the comments but didn't see anything that is other than, well, malinformed. I did see somebody say that Kevin didn't do research on the subject, oh yes that was you, but he must have since he found the same number I did.
-- July 28, 2005 01:31 AM ∞
Steve Lee wrote:Recently near the LA Harbor a T-shirt factory had a whole trailer of Wal-Mart product hi-jacked. The security guard, who only speaks/understands Korean, was tied-up by the banditos speaking Spanish.
It has been my experience that these companies are extended families of immigrants that do not hire outsiders, and the majority of the inputs are sourced offshore. So are these products really "Made in the USA"?
I am guessing that the company had to go to a competitor and purchase T-shirts that meet Wal-Marts specifications to fulfill the contract and not lose future Business.-- July 28, 2005 02:34 PM ∞
john massengale wrote:Yes, you've got plenty of bluster. That's good for a macho pissing contest, but it doesn't do much for finding the truth, which is what "Always Low Prices" is supposed to be about.
You're the only one to mention Gladstone Capital, but that's not the be all and the end all. At the same time, you ignore what doesn't corroborate your preconceived answer.
Frontline is a well respected program. Hedrick Smith is a well respected journalist. Using a couple of points to shoot from the hip while ignoring what they say is not good enough.
I referred to someone in the show who had an interesting counter to what you said, Duke professor Gary Gereffi. On the program (and the website) he said,
I interviewed people in Wal-Mart's global procurement center in Shenzhen, and I asked them about the total number of Wal-Mart suppliers. And I was told that Wal-Mart has 6,000 global suppliers. Eighty percent of those suppliers are in China.Knowing from the program that he's a Duke professor, it took me all of 2 minutes to find his e-mail address, and another minute to write to him (see below). Since Always Low Prices' purpose is to find the truth, is there a reason why it can't take 3 minutes to go to the source?
Dear Prof. Gereffi:At a blog called “Always Low Prices” , some economists and economic students are questioning your Frontline quote, saying there are 61,000 WalMart suppliers (rather than 6,000 ), and that US suppliers were paid an estimated $100 billion last year, versus the $18 billion paid to Chinese suppliers.
They base their estimate on WalMart’s sales and Chinese sales to the US. They don’t comment on US companies paid for work done in China.
Do you have any comments on why the very large disparity between what they’re saying and what you’re saying?
Thanks,
John Massengale
Gereffi also said:
In 1995, 6 percent of Wal-Mart's total merchandise was imported. Today, in 2004, 60 percent of Wal-Mart's total merchandise is imported.[Yes, that's a different figure. There is some question here.]
But Wal-Mart also sources indirectly from China, because many of the brands that are sold in Wal-Mart, like Hasbro and Mattel and [others in] the toy business, those companies also have China factories. So in a sense, Wal-Mart's share of Chinese goods is multiplied. It's got the products it imports directly and the products that it sells through other, branded manufacturers who themselves buy their goods from China.
So what do you guess Wal-Mart's real imports from China are if you put direct and indirect together, $30, $40, $50 billion?If we put direct and indirect imports together, Wal-Mart could have -- if Wal-Mart's direct imports from China are $15 billion last year, I think its direct and indirect, its total imports from China could be two or three times that number. ...Someone else on the program makes the point that profit on many of the Chinese items is very high, sometimes as high as 80%. Add 80% to $45 billion and ...
There is more going on here than is allowed for in your simple equation of WalMart's payments to Chinese and American suppliers.
-- July 28, 2005 06:32 PM ∞
jon wrote:Walmart purchased 150billion from 61000 us suppliers last year...do the math 285billion in sales 150billion in U.S. goods add a gross margin of only 20 % and that means $180bil of those sales came from the US suppliers. so 63% of sales of the total company came from the US suppliers. so the 60% imported fact is only true is 63 and 60 = 100 or if the US suppliers are the ones importing and selling the merchandise.
-- August 26, 2005 10:37 AM ∞
