Coincidence or Protectionism?

Last week, Wal-Mart and Carrefour, two of the best performing foreign supermarkets in China were confirmed to have been involved in the price fraud and will be fined US$75,987 by China’s National Development and Reform Commission. Both the US-based and France-based businesses are reported to have misled their customers by fabricating original prices and confusing them with the new prices.

Big retailer names including Wal-Mart and Carrefour are famous for their good quality and price competitiveness among Chinese customers. My grandmom prefers Carrefour to local grocery stores and would walk 15 more minutes every day just to buy a bunch of vegetables because she thinks the vegetables there are much fresher and looks more appealing. The price scandal seems totally unlike the perceived practice of foreign brands.

The price tag play might be an unwritten rule applied by foreign supermarkets in China as a direct result of the fierce business competition. The “price war” between foreign and domestic businesses is so intense that one can often see in-store posters claiming that if customers find the same product is sold at a lower price in other stores within 10 km (6.2 miles), the store would offer the customers ten times the price difference as a rebate.

Or it can be regarded just as a coincidence. The approaching Chinese New Year urges the retailers to get prepared for the biggest shopping season. Both Wal-Mart and Carrefour wanted to make a profit and they somehow unethically resorted to the price game.

If all this is more than a coincidence, then there is one more way to interpret the issue. The government might be trying to help local supermarkets/grocery stores to survive in the New Year race. Why did the two biggest foreign retailers risk their long-held reputation at the same time in China? Don’t they understand the basic business values and ethics? Are they the victims of their own misdeeds or the victims of protectionism?

Since a growing number of foreign grocery retailers enter the Chinese market in the past decade (Wal-Mart, Carrefour, Tesco, Auchan, Lotus…), the local brands are suffering a lot because of outdated management and lack of business innovation. The big names’ sudden falling from grace becomes an ideal chance for local supermarkets to survive and thrive during the holiday season.

About chushen

Chu Shen is a first-year full-time master student majoring in Strategic Public Relations from Annenberg School for Communication & Journalism at USC. She is especially interested in PR branding. Chu received her BA in English from Nanjing Normal University in mainland China and chose French as her second foreign language. She has great enthusiasm towards movie, travelling and gourmet.
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2 Responses to Coincidence or Protectionism?

  1. emilyfro says:

    Can anyone tell me a little more about China’s National Development and Reform Commission? Are they regulating super market behavior and other business matters on a regular basis or is this something Walmart could routinely get away with?

    • meifong says:

      The NDRC is the agency broadly responsible for handling economic affairs in the country. As to the question of whether Wal-Mart and Carrefour are being unfairly targeted because of protectionism, this one example alone would be scarce evidence. Multi-national retailers are not exempt from breaking codes and violating legal practices just by nature of their size and global footprint, and there are numerous examples of both retailers being fined for a whole host of infractions (labor, health, etc.) in many countries. Eg In 2006, Carrefour was fined by Shanghai courts for selling fake Louis Vuitton bags (though anyone who genuinely believed they buying real LV bags in Carrefour had to be naive or insane)

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