Wal-Mart (WMT) Loves Chinese Imports

October 12, 2007 by Douglas A. McIntyre

Wal-Mart (WMT) CEO Lee Scott had a special message for his investors and customers. Chinese stuff may break or be dangerous. But, it is cheap.

"Right now, the way it works, our model is `We sell for less.’ If we put products out there and we have to sell them for more because our competitors are sourcing more efficiently and more effectively for the same quality of product, our model doesn’t work. We cannot be at a price disadvantage," Scott said to the AP.

Wal-Mart may want to "buy American", but it can’t afford to. Scott was quick to point out that he could also buy from countries like Vietnam and Cambodia. But, the work forces and factory infrastructures are relatively small there, and Scott knows that.

The wonderful thing is that the Chinese know the dilemma that Scott and his US retailing competitors have. They need China to stay competitive in a US market were the poor and middle class have no interest in paying more for goods and services.

China has US retailers by the short hairs. And that means incentives to improve quality are small.

Douglas A. McIntyre