Unable To Control Product Sourcing In China, Walmart Pays A Heavy Price

Walmart has found itself embroiled in a controversy resulting from China’s efforts to improve food safety standards after several recent scandals. Walmart stores in southwest Chinese city Chongqing were caught selling ordinary pork mislabeled as organic. Thirteen stores were closed for two weeks and two store managers were arrested.The CEO of its Chinese unit and a top human resources executive resigned for “personal reasons.” The controversy comes at a bad time for Walmart, which is relying on the Chinese market to help make up for inadequate sales growth in mature markets. Part of the problem stems from the fact that Walmart has been unable to centralize source decisions because of a lack of relationships with local companies and the local government, according to the Financial Times.