China’s Big Box Retail Revolution; The "Wal-Mart Effect"
I subscribe to China Daily in part because I want to see how the Chinese see the world. The newspaper provides insights on China's state of mind and on how they see us in the west. Take for an example a very interesting article entitled "China's retail revolution benefits all."
The article looks at what the author sees as a revolution in Chinese retailing. He sees China as following the American model which reflects what he calls the "Wal-Mart Effect" which he presents in very positive terms. In fact, he sees it as a key component in U.S. economic power. Here is how he describes it:
"The growth of a technically sophisticated, highly competitive retail and distribution sector in the US over the past 50 years was the largest single contributor to the strong productivity growth there. The combination of economies of scale, modern information and telecommunications technology, and rigorously applied modern business practices, all in pursuit of greater efficiency and consumer satisfaction, has made modern retailing a powerful engine for competitiveness and economic growth in the US as well as in many other countries."
He then goes on to write about the "Wal-Mart" effect as it applies to modern China:
"Modern, sophisticated retail has for the past 15 years been growing in China as well. China has the world's fastest-growing retail market; it has been growing by 18 percent a year. The retail and distribution system has to grow and improve to satisfy booming demand. Wal-Mart, as just one example, has more than 350 stores in 130 Chinese cities, selling about $7.5 billion (5.7 billion euros)."
In reading the article, you get the feeling that the Chinese government sees the growth of mass merchandising as a positive transformation and will encourage it. As the author puts it "The added value for consumers is that these large stores typically provide better prices, more variety, better opportunities for local manufacturing and agriculture, a more sophisticated employment system, as well as business structures more amenable to effective enforcement of government regulations."
The emphasis in the last sentence is mine.
Pae commented:
Wow, something America does well (retailing) via Walmart which is the nmbuer one retailer in the country if not the world and nothing but Animus.You don't like Walmart dont shop there. Want made in America? Dont buy made in China. People vote with their checkbooks and not with there sentiments. If I had a dime for everyone who hates Walmart but continues to shop there I'd own Walmart. Peoples hypocrisy is astounding and using Walmart as a scap goat obscures the real problems of this country. The reason why Walmart buys Chinese goods locally is because its cheaper. The reason why Walmart buys Chinese goods for their American stores is because its cheaper. The reason why they want cheaper is because WE want cheaper. So they are just a manifistation of our desire to have cheap goods and plenty of them. So give Walmart a break. They are just serving us and if you don't like that fact maybe you dont like us. The reason why this whole dysfunctional trade imbalance is allowed to happen anyway is because the currency system allows it. Specialization and competitive advantages will always exist globally and with a sound currency can co-exist profitably.Our special status as a foreign reserve currency allows the Chines to export goods to us for paper (debt) to them. Our dollar is much too strong. If allowed to float against the RMB it would sink and then Chinese goods would cost more and domestic goods would cost less. Want to venture where Walmart would by their products from then? Why does Target get a pass? They buy Chinese stuff. How about other big retailers? Try to find American products, services abound but no products. Is this Walmarts problem? Why can China produce goods, ship them to us for cheaper than we can make them domestically? Why are their labor costs lower? Why are they attracting a stampede of foreign investment and the west only a trickle? These are real questions not "populism". What do you want people to do, show up at Walmart with pitchforks and torches for doing their jobs? We don't produce cheap quality goods anymore, other countries do. Now the question is why don't we? The answer is because we are in a co-dependent relationship with the Asians. They need to feed us until it hurts and we cant stop consuming until we burst, both sides are dysfunctional AND CULPABLE. The Chinese have been saber rattling about Americas irresponsibilty, borrowing to much, consuming too much, yadyadaya. How about them? Why are they continuing to lend us money? Aren't they responsible as well for this global imbalance? So although I agree that Walmart has done plenty to encourage outsourcing, they only did it at the behest of us and we need to shut up or put up (why weren't you guys buying American all this time?) Walmart is by no means a villan, it is merely a symptom of an American economy that has REALLY lost its way and attempts to ignite some kind of antiglobalist sentiment obfuscates the real problems of this country and makes the solutions much harder to find.
