The Wall Street Journal does not like the Chinese Communist party setting up a branch for Wal-Mart employees, especially after putting a union in place for the big retailers "associates" We don’t like it either. As the Journal points out the Chinese position may be: We’re watching you from outside, and inside.
Whether Wal-Mart was consulted in the matter is anyone’s guess.
What is not a guess is that having the government mess in your business in a totalitarian country is never good news. And, Wal-Mart’s growth problems in the US make aggressive expansion into China critical to the company’s future.
No one should be surprised if the Chinese government gets more concerned as Wal-Mart gets larger. It may not be good for local merchants. And, what if the goverment thinks Wal-Mart does not pay its people enough. The party and the union could strike the big retailer and have a good deal of leverage.
The chances of a train wreck at Wal-Mart’s China operation get bigger by the month.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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