For any large, multinational corporation, dealing with compliance laws around the world is a complicated matter. This is especially true in China, where businesses must navigate tricky waters dealing with the government and state-owned enterprises.
The latest corporation to hit a speed bump in China is mega retailer Wal-Mart. Recently, China Central Television (CCTV), the country’s major state-owned broadcaster, accused Wal-Mart of bypassing China’s quality, trade and food-manufacturing permit procedures and working with unlicensed vendors. According to the Wall Street Journal, CCTV claimed to have reviewed hundreds of company documents that revealed that Wal-Mart approved hundreds of unlicensed products.
Wal-Mart’s first reaction was to defend its procedures, stating that it accelerates approvals for certain suppliers on a limited basis. As of yet, the company has not received penalties in relation to the allegations, but in response, Wal-Mart has decided to bolster its compliance with Chinese law. In the past, however, Wal-Mart has faced fines for putting faulty products on the shelves, according to CCTV, and the company has, in the past, invested millions to strengthen its food-safety program in China.
The retailer released a statement stating that it plans to ramp up its scrutiny of documents related to products being sold in China. It anticipates collecting more than a million documents per year to help it verify that it receives government test results for all items.
A strong position in China is something Wal-Mart is eager to gain. Right now, the world’s largest retailer is number three in China, and it faces a great deal of competition from local businesses.
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