Running A Walmart In China Is Hard

The problems retailers face in China are well known, with labour and logistics probably being at the top of the list. For stores that sell food, you’ve also got to throw in a number of other complications involving food quality and labelling. Now add on top of all that the concerns of foreign investors like Wal-mart or Carrefour, and the idea of running these things sure is daunting.

There have been lots of examples over the years of these problems, including Wal-mart’s fairly recent issues with food labelling in a few of its outlets in Chongqing last year.

And now there’s this:

A Wal-Mart store in Central China’s Hubei province has been fined 100,000 yuan ($15,870) for a discount hoax, the local price watchdog said Tuesday.

The store located at Xudong Avenue in Wuhan, capital of Hubei, sold a new product of Blue Moon liquid soap at a self-claimed discount price of 48.8 yuan in May. The price was 1.2 yuan higher than before the promotion, Zhang Jianmin, vice head of the Hubei Provincial Bureau of Commodity Price, told a press conference.

“When the promotion price is higher than the traceable lowest price of the period of seven days before the campaign, it is a price fraud,” he said.

Yikes. The Price Law, and related issues in the Anti-unfair Competition Law and Anti-Monopoly Law, can give a retailer nightmares. In this instance, you had what sounds like a local decision, perhaps just in one store, to sell a certain product “on sale,” but in fact the sales price was higher than the sticker price offered within seven days previous to the sale. Apparently you can charge more for a product, but you can’t then call that a “sale.” Makes sense – that’s fraud.

No idea whether this was a mistake or done on purpose, but the store was fined 100,000 yuan, and Wal-mart has to deal with this as yet another PR bump in the road. A very small matter, to be sure, but then again, a story about it made it into the national Xinhua news feed, and the Hubei price bureau was talking about it at a press conference. I have a feeling all it takes is one pissed-off customer to make a phone call to the local officials to get that Wal-mart investigation up and running.

It’s tough being a foreign investor in China, as Wal-mart by this point knows all too well. Then again, things could be worse. At least it’s not a Japanese company.

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