Edited by Anita Chan
ILR Press, 2011

Reviewed by Scott N. Paul

Americans have well-developed views about Walmart, which has changed the landscape of our retail sector, our manufacturing sector, and (quite literally) the downtowns of many small- and mid-sized communities. Plenty of books have attempted to analyze the good, the bad, and the ugly aspects of Walmart’s impact in America. But, as Anita Chan writes, “[w]hat happens when the world’s largest corporation encounters the world’s biggest country?” That’s the question that Walmart in China attempts to answer.

As Chan is quick to mention, there has not yet been a single book devoted to Walmart’s presence in  China. That’s only one of the reasons why this is a welcome addition to the literature on Walmart. The volume adds considerable context to contemporary debates on our economic relationship with China. It’s also a penetrating peek behind the curtains into just how Walmart can offer those impossibly low prices that attract so many consumers.

This book will not likely be stocked on the shelves of any Walmart stores, which still prominently  feature founder Sam Walton’s biography, but I do not think that was Chan’s goal. It is, however, a  useful reference for labor activists and scholars, Walmart critics and analysts, and, hopefully, even a few policymakers.

Walmart in China focuses on three particular nodes. First, it delves deeply into the retail giant’s  supply chain in China, as well as the working conditions for the men and women who toil in those factories. Then the book explores the working conditions and management of Walmart’s retail stores in China. Finally, the book looks at the unlikely unionization of some Walmart workers in  China. The chapters of this edited volume have been written by an array of well-qualified academics and researchers from the U.S., China, and Australia. Chan, the editor, is an Australian-based scholar  who has authored or co-authored numerous books on related topics, and was the co-editor of the  China Journal for six years.

It’s fair to say that decisions made in Bentonville, Arkansas—the headquarters of Walmart—have  impacts felt around the globe. Nelson Lichtenstein’s chapter provides some background on how Sam Walton did it. First, by regaining some control of pricing from producers. Next, by cutting out wholesalers. Finally, by finding low-cost production platforms such as China, which promised not only cheap labor, but also political stability, a solid infrastructure, and a stable exchange rate.

Thirty years ago, Walmart cynically embraced a “Buy America” campaign, publicizing a few decisions  it made to buy products domestically that had been made overseas, even as the overall percentage of goods it imported continued to grow. Then, imports accounted for only 5.8 percent of Walmart’s sales in its U.S. stores. Lichtenstein notes that, as of 2006, 80 percent of the suppliers in Walmart’s database were in China.

The chapter by Xue Hong takes us to Guangdong Province in China, the heart of Walmart’s supply chain, to look at working conditions. Here, the toys, clothes, and retail cornucopia that consumers find on Walmart’s shelves are assembled in factories where, according to outside investigations, labor law violations are pervasive. Walmart did establish an ethical standards program for its suppliers, but that program appears to be little more than window dressing since it does not permit outside audits. It is also counterproductive, since much of the work previously performed by audited contractors is now done by unlicensed and unacknowledged subcontractors to keep costs low, despite the human toll. Workers are reluctant to step forward to report abuses because they fear retribution and potential factory closures as a result of reported violations. Even relatively low Chinese legal  standards for work hours and minimum wages seem to make it impossible for many contractors to meet Walmart’s pricing policies, which is why Guangdong may itself fall victim to outsourcing to provinces further inland, as well as to Vietnam, Bangladesh, and Cambodia.

Yu Xiaomin and Pun Ngai explore whether or not corporate social responsibility (CSR) policies, such as Walmart’s ethical standards program, have any bearing on working conditions within the toy industry in South China. Toy production is particularly important to Walmart, according to the authors, because its low pricing is a “traffic booster” in stores. As a result, every effort is made by Walmart and its contractors to cut production costs. For example, only thirtyfive cents of the sale of a $10 Barbie doll by Mattel goes to the contracting factory for labor, electricity, and factory overhead. In a case study of two toy factories—one under heavier monitoring—the authors observed that persistent violations of labor law still occur. The monitored factory recorded slight improvements in the use of excessive overtime, but workers were still grossly underpaid during periods of peak production. The unmonitored factory, in fact, paid better and provided better accommodations for the workers. The authors conclude that more transparency and independent audits would improve monitoring programs.

Chan and Kaxton Siu use worker surveys from four garment factories and five toy factories in Shenzhen City to paint a fuller picture of working conditions and the impact of monitoring in Walmart supplier factories. The survey research led the authors to conclude that China’s legal minimum wages are set far too low, and that those wages should be expressed in an hourly (as opposed to a monthly) rate to reduce the opportunity for exploitation. Moreover, “[t]he general failure of social auditing to detect violations of vital labor standards means that the CSR program of which Walmart boasts has had little impact on workers at the company’s supplier factories” (p. 91).

The book next turns to the company’s retail operations in China, where nearly three hundred stores have opened for business since 1996. As sales in its U.S. operations generally trend down, Walmart is counting on growth in markets like China. David J. Davies notes the ironic overlap between Walmart’s corporate culture and elements of China’s Communist Party propaganda. Scott E. Myers and Chan explore how Walmart’s “sundown” rule—completing all tasks before leaving for the day—can drive associates to work off the clock. Davies and Taylor Seeman examine the disconnect between some of Walmart’s anti-corruption policies and local Chinese business practices, sometimes leading to confusion. As one Walmart sourcing manager in China observed, Walmart wants to change China, but this is still China. Eileen M. Otis explores the lives of Walmart cashiers, who are subject to steep fines, penalties, intimidation, and technological surveillance in an effort to ensure a high level of customer service is delivered. Salespeople in stores, on the other hand, are provided by vendors and work on commissions. Two different techniques to cut costs, both with very profound implications or Walmart employees.

Finally, the book turns to the presence of unions in Walmart’s stores in China, perhaps the most unlikely development of all. Chan, Jonathan Unger, Diana Beaumont, and Katie Quan dig into this  phenomenon. Walmart has successfully resisted unions in its stores in the United States, despite intensive efforts by several unions and many activists and political supporters to establish representation. In China, unionizing Walmart stores began as a genuine grassroots effort to improve conditions. It then became hijacked by the All-Chinese Federation of Trade Unions (ACFTU), which has close ties to the Communist Party and regime in Beijing. The ACFTU and Walmart signed an agreement in 2006. Now, union officials in local stores are approved by Walmart management, and most of the local unions have become outlets of the Communist Party. “This Walmart trade union is an empty shell,” Unger, Beaumont, and Chan quote one member as saying (p. 225). While the establishment of unions at Walmart stores in China represents clear legal progress, Walmart workers have reaped few, if any, real benefits.

The book is particularly timely given recent trends. First, rising costs in China—particularly in Guangdong—may be once again altering Walmart’s sourcing calculations, causing it to look to inland China and nations like Vietnam. Second, the Obama administration is negotiating a new trade agreement, the Trans-Pacific Partnership (TPP), that may lower tariff and investment barriers in low-cost production nations—including Vietnam. Simultaneously, the administration is promoting the idea of “reshoring” manufacturing, albeit for far lower wages for workers in the United States—a trend Sam Walton embraced in the early 1980s, even while he made Walmart one of the world’s largest importers. Third, recent investigations of working conditions in Chinese factories owned by Foxconn that assemble iPads, iPhones, and other gadgets for Apple have heightened public awareness of the plight of too many Chinese workers. Finally, Walmart executives are keenly aware of the company’s image problem, and have recently promised a more sustainable brand. If too many workers in both retail and manufacturing are too poor to shop at Walmart in China, the United States, or even Vietnam someday, the company’s entire business model collapses.

Taken together, these developments may change Walmart’s strategies. This book certainly provides the evidence that positive changes are necessary to ensure dignity, fair pay, and safe conditions for its retail workers and contracted factory labor. Or, in ten years, will we simply change the title of this book to Walmart in Vietnam?