International Issue Examination Walmart in China

Walmart thought it would make massive sales and business success as it conquers the unexplored business lands of China. Nonetheless, although Walmart embraced and took the opportunity by expanding to China, it learned the hard way that opportunities and realities do not always coincide. Walmart has not been able to convert the potential in the Chinese market into profitability. Eventually, Walmart has spectacularly failed to make any significant gain from China. Thus, the failure of the company to make substantial benefit after going global is an issue that needs a closer examination. Walmart also paid hefty fines for the same even though it believed that the accusations were false. Moreover, the company has been putting the Chinese government in an awkward position in past few years.

Since the year 2013, the Chinese activists started speaking about the issues of Walmart and its employees. It is common for the Chinese government to arrest labor activists, but on the issue relating to Walmart, it opted to stay away, for it did not want the public to feel as if the government was siding with a foreign company (Hernández, 2016). Therefore, although the government protects its businesses, it would not do the same for Walmart. Although China has made a massive investment in developing its infrastructure over the past few years, regions outside the main cities continue to wallow in miserable infrastructure. Still, the standards of the infrastructure are below the standards of a developed country, where Walmart does its business.

Therefore, poor infrastructure is an economic issue that the management of Walmart had to deal with when penetrating into the Chinese market. Therefore, it is logical to conclude that the management issues of Walmart when entering the Chinese market is that China’s political, economic and cultural environment possesses a severe challenge for international organizations investing in China. Therefore, had Walmart took time to study the issues, perhaps it could have been in a better position than it is today while conducting business in China. Thus, the theory is critical in understand culture, and thus forming a better product mix for the said culture, and hence circumvent the cultural issues in the country. Moreover, the theory is helpful to Walmart’s issue since it enables it to realize that Chinese have a high sense of long-term orientation.

Jean (2012) notes that Chinese tend to worry about the future and therefore, they would buy goods in small quantities, in a bid to save some amount for future use. Managers ought to put this aspect about Chinese into consideration to be able to develop a right product mix for China market and thus eliminate cultural issues. Other than being less individualistic, the Chinese have a strong sense of distance power. The monopolistic benefit may come from strategic and exclusive access to markets and raw materials through patent rights and the ability to own scarce but critical factors of production. The country Specific Advantage theory would be practical in addressing Walmart’s woes mainly using the arguments L-factor (Location). The location factor allows the corporation to analyze the location factor with the aim of determining the best location to set its firm (Zhang, 2016).

Notably, the Location factor allows the multinational organization to break the area into Political, Social and Economic factors. The economic factors would include an analysis of the market size and scope, quantity and quality of the factors of production, and infrastructure development such as transport and communication. Walmart’s entry into China was under the tag “everyday low prices. ” Although the model was successful in many other countries that Walmart ventured into, it was regarded as cheap and risky for the Chinese consumers ("Why Wal-Mart Never Picked up in China?” 2014). Transferring management styles from America to China leaves managers and organizations prone to devastating mistakes that would cost the company given that China's culture is unique, and that what works in the US may never work in China.

Therefore, the Walmart management regarding penetrating the Chinese market erred from the beginning. Further, although Walmart was voted the most popular organization among its employees in the US, its strategy of enticing the employees in China failed miserably. Besides, still on the same footing, the Walmart redesigned its slogan from “everyday low price” to “low price” and eventually to “worry free” slogan. This is in recognition that low prices confuse Chinese who worry more about quality than price. They think a cheap commodity could be a product of poor quality (Tribune news services, 2016). Nonetheless, even such changes in strategy and operations have not changed the plight of Walmart in China. In 2014, it became apparent for Walmart that it had to rethink its policy on the Chinese market.

• Walmart needs to have a close relationship with the Chinese intermediaries to enable it to eliminate its direct purchase of inventory. This would improve its contact with the Chinese people and give it a better chance to understand the culture of China. • Walmart should familiarize itself with the Chinese political-legal environment by increasing its communication with the Chinese authorities. This would also enhance its ability to adapt to the laws and regulation of the country, thus a chance to integrate into the state. • Given the analysis of the Chinese consumers above, Walmart needs to open branches in the city centers and give-up locating its stores in the suburbs. , Driffield, N. , & Zhou, Y. Country-specific advantage, firm-specific advantage, and multi nationality – Sources of competitive advantage in emerging markets: Evidence from the electronics industry in China.