China Can Say
No To Wal-mart By Angel Feng
For all suppliers, client like Wal-mart can be God. However, it may also turn into a devil when time and
ccording to the Export Departmento f LinaerG roup,
Boshan,Shandon g, the company haslost its most
important client, Wal-mart’s order for 2008 spring. A
Linaer’s friendsin the same boat include Zuobang ApparelC om- pany, Weifang, Shandong.
As the largest retailerin the world, Wal-Mart owns more than 4,000 shopsin domestic marketin USA.W al-Mart’s global annual sales reach30 0 billion dollars, 10% of which comes from the retailing of costumes.
From the 90s of last century, in order to cut down the cost, Wal-Mart turn most of its orders into Asia, and China offers 80%of Wal-Mar’s products. The honeymoon between Chinesesuppliers t
and Wal-Mart brought really alot of sweetnesst o many exporters in China.S everal yearsag o, being the supplier of Wal-Mart can be the top event that worth greatest celebration. Hwoever, marriage can never be a beodf roses. Many Chinese supplierfinsd some hard
th times with China’s8 largest tradepa rtner, Wal-Mart.
Do you have Wal-Mart Excessive dependency Problem? There is a sayingth at cooperatingwith Wal-Mar is like using t
drugs. The more you use, the more you need. When the drug is taken away, the factory may get in a real big trouble. Losing the Wal-Mart’s order can be a fatal strike for lots of China’sfa ctories and suppliers. 80% of Linaer Company’s products are soldto Wal- Mar, and ’s 60%with Zuobang Company. tit
At the beginning of cooperation,W al-Mart would only make a small order at a very low price. If the products are sold well, Wal-Mart would make bigger and bigger orders whicwhoul d take millions of dollars. The supplier expands its factory step by step in order to fulfill the need of Wal-Mart. Some big orders arealso very urgent, and take all the strength of the supplier. Gradually, the supplier loses other customers, and fall into the “excessive dependency” with Wal-Mart.
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If the supplier has only a few kinds of products, she roducts from Vietnam, India, Pakistan and Turkey. buy textile p
can make a realbig businessth rough cooperatingwith Wal- Apparel, cotton and textile products from countries mentioned Mart. However, as soon asthe products areno longer above would be 10% cheaperthan those produced in popular, Wal-Mart would ceaseth e cooperation China. In recent years, some suppliewhrs o do
businesso nly with Wal-Mart and other large immediately.
Another dilemma is that the price retailersw ent closedin Shenzhen. offered by Wal-Mart is getting lower T h e we a k A m e r i c a n e c o n o my, every yeare ven the cost raisesu p. the climbing price of oil and a series
Some suppliersa ccepted the order at of errors in strategies have caused very low price, but fall into financial the stockpile of Wal-Mart become a
real problem, this stockpile includes probems becauseo f marketing l
apparelp roducts and homet extiles at reasons.
the price of 2 billion dollars. He Goes Away Without
Even Looking Back What’s the Next?I f Wa l - M a r t f i n d s o u t a c h e a p e r The problem in the cooperation with supplier, he would change his order without Wal-Mart is not exclusivewhe n we check the hesitation. In order to get the lowest quote price, caseof Chinese suppliers andother large retailers such Wal-Mart would summon all the suppliersin China together as Carrefour. As China has alreadjoiney d the international and let them beat downeac hothe r facet o face.S ome suppliers supply chain, it’s important to know the “dos” and “don’ts” could only choose to sacrificethe profit and the benefit of when coping with retailers likeW al-Mart. workers. How to avoid the riskswhile keep cooperatingwith Wal-
According to Langsha Sockthes, quantity of production Mart? The only answer iss upplying not only to Wal-Mart, but and order are all decidebdy Wal-Mart. An extreme examplei s also to Carrefour, Auchan and TescDoe. tract the large orders. that a supplier took an order of 8 million dollars, but Wal-Mart Avoid doing more than30 %t o 40% of the total businessw ith demands severalmillions of bail, without guaranteeing that one customer.
the order would not be cancelled. Under allth e pressuresme ntioned below, LangshaS ocks,
What’s also difficult to understand is that the contract the largest socks producerof China has decidedto stop the signedb y the Wal-Mart and suppliers “isc ooperation”but not cooperationwith Wal-Mart.
“purchasing”, so even if there is no problem wit h the quality, and “Wal-Mart can’t do businessi n China with that price.” the products don’t gow ell, the retailers would askamend for s. So saysth e International Trade manageCr ao Guoshuno f Hard Times LangshaG roup. Gema Company, who produces bagsan d AsC hinese Yuan’sapp reciationgoe s on, the priceso f raw handbags, decided not to join the supply chain of Wal-Mart materials are alsogetting up, plus the wages are alsog etting after a thorough consideration of potential risk.A ccording to up, the prices for export are in the processo f revaluation. Gema,the big order also brings in big risk, which overtakes During this process, the prices of Made in Chinaw ould go up the limit of the company. According to General ManagerL v without doubt. However, the changeof the price would also Qang, GemaL td expors more than 100 million dollarse very itlead to the changeof orders. year, andnot even one penny comesfrom Wa-Mar. He red lttiIn fact, Wal-Mart is already lookingfo r cheaperr esources. to find more chancesf or sales, 50%of which is realized by The global supply chain of Wal-Mart is stretching to more selling to salesagencie s. than 70 countries and districts. In AmericanW al-Marts, Anyway, the sales isg rowing annually in Wa-Mar. As ltproducts from Pakistan,B engal, Middle and South American long as China keepsthe position of world facory, Wal-Martt are presented with those from China. can’t ignore the Chinesesupplier s. Meanwhile, finding more Consideringth e quota problem when import textile tunnels of distribution would not only avoid risk,bu t alsobrin g products from China, it’s more convenient for Wal-Mart to more benefitf or the suppliers.
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