Good Wal-Mart Business Bad for America?
Tuesday, September 19, 2006
Buying from the big boys
Good Wal-Mart Business Bad for America?
by Andrew Bast
Wal-Mart's immense network of stores and all-service Supercenters requires a massive purchasing operation, and if you want to sell to the nation’s largest retailer, you'd better believe it's going to be on their terms.
Get your pitch together, and you’ll be ushered into a small, white room with a table. You’ll face the Wal-Mart buyers, and more often than not, those men and women across the table from you have the upper hand. Because if your product—its purpose, prevalence, and most importantly, price—doesn’t make the grade, Wal-Mart has someplace else to turn: China.
After the death of Deng Xiaoping, China opened to foreign investment and development, and Wal-Mart capitalized. The company’s management encouraged learning Mandarin, and explicitly expressed an interest in being an international powerhouse. In the early 1990’s, Goldman Sachs said that the company’s doings overseas, namely in China, marked, “a major strategic merchandising revolution.”
On the one hand, the strategy has proved to be great business. Wal-Mart is the U.S.’s top retailer (also the top importer of Chinese goods), and across the country consumers are afforded low prices on everything for their family, from toys and irons to eyeglasses and truck tires.
On the other hand, Wal-Mart has become the kind of behemoth that has the economic power to build and destroy factories, industries, and even entire towns. Remember the white room where you’re selling your product? Well, if the basketball you manufacture is priced at $12.99 and Wal-Mart won’t settle for anything less than an $8.99 price point, your pitch won’t fly. Wal-Mart can buy plenty of basketballs somewhere else—guess where?—and sell them at nine bucks a pop.
Almost three out of every four items on Wal-Mart shelves are made in China (that’s excluding food products). And considering that the company sells more to American consumers than any other company, it doesn’t take long to figure out that the company’s heavy draw on Chinese labor has serious repercussions for the American workforce. Just take pickles, for instance. Serious business.
Sure, it’s market forces that are bringing benefits to American consumers and making Wal-Mart a massively successful company. And no one disputes the fact that any big player has to deal with a globalized—some call it flat—world. But isn’t the economic logic flawed?
Wal-Mart can only sell products, no matter how cheap, to people who have the money to buy them. If the country’s manufacturing sector is rapidly being exported, especially to China, won’t Wal-Mart end up with stores full of Chinese goods and tens of millions of Americans out of work without the nine bucks (instead of $13!), to buy their kid a basketball?
Simple, cheap, and fast -- The Inquirer's weekly update.
THE NEW YORK INQUIRER, launched in July of 2006, is the first all-online Alternative Weekly. Every week, The Inquirer offers up analyses of the national and world stories going underreported elsewhere, that is, if they're being reported at all.
Buying from the big boys
Good Wal-Mart Business Bad for America?
by Andrew Bast
Wal-Mart's immense network of stores and all-service Supercenters requires a massive purchasing operation, and if you want to sell to the nation’s largest retailer, you'd better believe it's going to be on their terms.
Get your pitch together, and you’ll be ushered into a small, white room with a table. You’ll face the Wal-Mart buyers, and more often than not, those men and women across the table from you have the upper hand. Because if your product—its purpose, prevalence, and most importantly, price—doesn’t make the grade, Wal-Mart has someplace else to turn: China.
After the death of Deng Xiaoping, China opened to foreign investment and development, and Wal-Mart capitalized. The company’s management encouraged learning Mandarin, and explicitly expressed an interest in being an international powerhouse. In the early 1990’s, Goldman Sachs said that the company’s doings overseas, namely in China, marked, “a major strategic merchandising revolution.”
On the one hand, the strategy has proved to be great business. Wal-Mart is the U.S.’s top retailer (also the top importer of Chinese goods), and across the country consumers are afforded low prices on everything for their family, from toys and irons to eyeglasses and truck tires.
On the other hand, Wal-Mart has become the kind of behemoth that has the economic power to build and destroy factories, industries, and even entire towns. Remember the white room where you’re selling your product? Well, if the basketball you manufacture is priced at $12.99 and Wal-Mart won’t settle for anything less than an $8.99 price point, your pitch won’t fly. Wal-Mart can buy plenty of basketballs somewhere else—guess where?—and sell them at nine bucks a pop.
Almost three out of every four items on Wal-Mart shelves are made in China (that’s excluding food products). And considering that the company sells more to American consumers than any other company, it doesn’t take long to figure out that the company’s heavy draw on Chinese labor has serious repercussions for the American workforce. Just take pickles, for instance. Serious business.
Sure, it’s market forces that are bringing benefits to American consumers and making Wal-Mart a massively successful company. And no one disputes the fact that any big player has to deal with a globalized—some call it flat—world. But isn’t the economic logic flawed?
Wal-Mart can only sell products, no matter how cheap, to people who have the money to buy them. If the country’s manufacturing sector is rapidly being exported, especially to China, won’t Wal-Mart end up with stores full of Chinese goods and tens of millions of Americans out of work without the nine bucks (instead of $13!), to buy their kid a basketball?
Simple, cheap, and fast -- The Inquirer's weekly update.
THE NEW YORK INQUIRER, launched in July of 2006, is the first all-online Alternative Weekly. Every week, The Inquirer offers up analyses of the national and world stories going underreported elsewhere, that is, if they're being reported at all.
posted by Walking Contradiction at 3:27 AM
1 Comments:
you know something....people mostly americans don't normally think about stuff like this because they feel it doesn't matter to them...they have a job and have the money and feel they are saving the few cents by shopping there...but they never stop to realize what's going to happen when they don't have a job....those few cents they were saving are now what they are living off of...especially here in detroit..it's going from bad to worse....
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