Bloomberg News

Wal-Mart Reviewing Management at China Stores After Pork Probe

October 25, 2011

Oct. 25 (Bloomberg) -- Wal-Mart Stores Inc. is reviewing management procedures at its stores in China as it re-opened outlets in Chongqing after officials ordered all 13 of them shut for two weeks for mislabeling ordinary pork as organic.

The world’s largest retailer has doubled efforts to improve operations and needs to review management procedures across China, Del Sloneker, chief operating officer of Wal-Mart China Hypermarket, told reporters today in Chongqing. He also apologized for the mislabeled pork cases and didn’t say how much the review or other steps would cost.

Asia Chief Executive Officer Scott Price, who took control of China operations earlier this month, visited some stores in Chongqing as China’s second-biggest operator of hypermarkets seeks to regain any consumer goodwill lost in the pork labeling scandal. Wal-Mart was fined and ordered to halt operations at the 13 stores, while police detained 37 employees, the most severe punishment of the retailer since entering China in 1996.

“If Wal-Mart does correct its mistakes and improve, we still believe it’s a good company and will keep shopping there,” said Rong Xuehua, 72, who lined up outside a store in Chongqing at 7:45 a.m. for an 8 a.m. opening. “Ordinary people in Chongqing don’t have much money. You get good value for money at Wal-Mart.”

Price apologized to Chongqing Mayor Huang Qifan, promising to correct the problems, spokeswoman Christina Lee said last week.

Discounts, Safety Lab

Wal-Mart also provided special training for Chongqing employees, upgraded store facilities and will set up a laboratory for fast quality checks of food at its Chongqing stores, according to today’s statement.

About 100 people rushed into a Wal-Mart store in the city’s south today when it opened at 7:50 a.m., 10 minutes ahead of schedule.

An apology is posted on the right side of the entrance. On the other side is a sign advertising discounts on more than 60 items, including apples, TVs, soap, milk and pork, until Nov. 3.

The sign had an image of a policeman and the characters for the phrase “safe Chongqing.”

Since 2006, the Bentonville, Arkansas-based retailer has been cited for 21 cases of selling expired or substandard food and false advertising in Chongqing city.

Temporary Halt

The failure to correct violations at outlets in Chongqing over the past five years forced authorities to temporarily halt operations as a warning, Tang Chuan, director of law enforcement at the city’s Bureau of Inspection and Enforcement, said in an interview last week.

Chongqing fined Wal-Mart 3.65 million yuan ($573,000) after 12 of 13 outlets in the city were found to have sold the mislabeled pork. The retailer pledged to cooperate with the investigation.

Wal-Mart’s network has grown to 353 stores from eight in what it forecasts will be the world’s largest grocery market by 2014. The company reported annual revenue of $7.5 billion in China last year, about 1.8 percent of total sales worldwide.

Since 2005, Wal-Mart’s market share has more than doubled to 11.2 percent, making it second-largest supermarket chain in the country behind Sun Art Retail Group Ltd.

“We are embarrassed and going to work harder to ensure that this is not going to happen again,” said Sloneker.

--Michael Wei and Stephanie Wong. Editors: Dave McCombs, Suresh Seshadri.

To contact Bloomberg News staff for this story: Michael Wei in Shanghai at mwei13@bloomberg.net; Stephanie Wong in Shanghai at swong139@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net


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