Wal-Mart and China — Digging In or Stuck in the Mud?

No retailer -- or any Western organization for that matter -- has such a vested interest in China as Wal-Mart. In recent weeks, Wal-Mart reiterated its committment to the Chinese market. Procurement Leaders picked up on this news, quoting Wal-Mart Asia's President and CEO noting that "the economic downturn or inflation or high production cost has not had an impact specific to our sourcing in China as compared to other countries …my gut feeling is that the quality of Chinese goods will give a competitive advantage as we go forward". Clearly, Wal-Mart has a huge vested interest in China due to its plans to become one of the dominant retail giants as the countries middle and consumer classes expand. But from an export sourcing perspective, is Wal-Mart digging in its heals in China? Or is its existing investment causing it to become stuck in the mud relative to sourcing from other developing countries in Asia? Methinks it's a little of both. For Wal-Mart has invested so much in China sourcing, backtracking now would be extremely costly. But on the other hand, Chinese currency appreciation, inflation and tax code changes are bringing anything but a rollback. For Wal-Mart and other retailers, there's no blue light special in China these days.

- Jason Busch

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