Wal-Mart profits from human misery (Part 4671).

Profit from the misery of your customers? Check. Profit from the human misery of Chinese peasants with nowhere else to go AND the people who buy their wares? Check. From All Roads Lead to China:
[I]t is once again Wal-Mart’s investment in China that really saved them, and the news cycle of product safety bring trumped by the economy. with some experience working with big box retailers, one of the most interesting phenomonon I have seen is that while Wal-Mart has invested so much, and made so much money from that investment, others have yet to really take the same steps. Instead, they chose to continue working through the traders in Chicago, NY, LA, etc who will purchase from a trader in HK/ TW… who will buy from a trader in China… who will buy from a factory in Suzhou. In an up market, when consumers are not worried about making minimum payments this works, but in a down cycle these intermediate steps become insurmountable in a couple of ways. first, the ability of a group like Target, who operates through more trading firms than through direct relationships, cannot bring their prices down to the level of Walmart - even for the same goods because all those traders who are in the middle need their take too.
He says this like it's a good thing. Ask the people in the United States who used to make the stuff Wal-Mart sells. It wasn't that long ago that China was a distant frontier for American retailers. And on what appears to be our theme for the day here, I understand the logic behind what Jeff calls the Snoopy happy dances of Wall Street gnomes, but I still have to wonder: What if Americans are getting so poor that they by actually by less stuff rather than just cheaper stuff? Instead of downgrading their store of choice, what if they actually shop less? Perhaps use their tax rebate check to pay off old debt rather spend it on cheap plastic crap and fatty meat? What would happen to your happy dances then?

5 Responses to “Wal-Mart profits from human misery (Part 4671).”

  1. The Wal Mart isn’t happy unless everyone else is miserable mode has not worked in Japan. The depressed Japanese economy has not translated into “misery =money”equation in Japan ,that it has added up to, elsewhere.Once in a while,justice prevails.

  2. Allroads says:

    Jonathan,

    All Roads here.

    First, if you were to search my blog a little more thoroughly, you would find that I actually share a number of your views, am of the general opinion that the consumerism of America has run amok, and have hammered WalMart on more than one occasion.

    With regard to the Wal-Mart’s business model in China being a good thing, I would say that it is. Where there are a number of corrupt retailers/ brands who are sourcing from China, Wal-Mart has a pretty good track record to this point.

    and from the U.S. side I do see Wal-Mart’s ongoing concern as important also. After all, there are more than 100,000 people who call themselves employees, and millions who call themselves customers… and right now, for right or wrong, it is a good thing Wal-Mart is there to provide jobs and low prices.

    Anyway, one of the reasons I enjoy being in China is that I am not a “consumer” like I was in the U.S. I don’t watch TV, I don’t buy crap just cause I have an impulse, and nearly every time I buy things it is at a mom/ pop store.. and there is a lot that I value about that experience.

    But, as I study the development of China, I do see that (for right or wrong) the Wal-Mart’s of the world are needed on some level. Where the balance lies, I don’t know.

  3. Jonathan Rees says:

    Thanks for stopping by All Roads.

    My apologies for the rush to judgment, but I’ve just been reading so much these days about Wal-Mart making bucks off the current recession that it was easy to take your comments the wrong way.

    As I’m interested in Chinese manufacturing, I’m going to bookmark you and visit at least periodically. Maybe we can talk more about this stuff soon.

  4. Allroads says:

    Jonathan,

    No worries. I have been working on bringing a balanced view on China for a long time, and I know what if feels like to have to work against the tide.

    Have a good weekend
    R

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