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Mon October 17, 2011
Head Of Walmart In China Resigns Amid Controversy
Walmart announced today that its chief executive in China was resigning for personal reasons. Ed Chan's resignation, however, comes about a week after China arrested Walmart employees and forced the retail giant to close 13 stores over allegations it was selling regular pork but labeling it as organic.
Chan resigned along with Senior Vice President of Human Resources Clara Wong and both of them, the company said, quit for "personal reasons." But as Reuters reports, it's been rocky of late for Walmart in China:
This is the second round of top-management resignations at Walmart China in less than five months. In May, its chief financial officer and chief operating officer resigned "to explore other opportunities," the company had said.
"It's really hard to say whether this (Monday's resignations) is a consequence of that (pork scandal)," said Torsten Stocker, a China retail analyst with Monitor Group.
"Obviously what happened in Chongqing is impacting their business in Chongqing and presumably ought to be having some impact on the grand overall business. Any type of leadership change like this, it's never a good thing."
The AP adds that food safety is a touchy subject in China, because the country has faced so many safety issues from poisoned infant formula to chemical-laced pork. But closing stores and arresting employees, reports the AP, "seemed unduly harsh." Analysts told the AP it "might be politically motivated as Chongqing officials try to position themselves as consumer advocates ahead of national leadership changes beginning next year."
But The Financial Times has a different — and much broader — explanation:
A number of US executives in the business community in Beijing have privately voiced concerns that Walmart could be the target of retaliation for proposed US legislation aimed at punishing China for keeping its currency undervalued.
No Chinese officials or media have suggested any such link but some US executives fear the singling out of Walmart could be intended to send a message that Beijing can retaliate in the face of American actions it considers tantamount to launching a "trade war".
Chongqing's Communist Party boss, Bo Xilai, is a prominent member of the Party's 25-member ruling Politburo and as a former commerce minister he is closely associated with China's trade and currency policies.
Walmart's Chongqing operations have run into trouble with local authorities three times this year. The company has been punished 21 times in the city since 2006.