WAL-MART Hit The Muzzle

WAL-MART is paying for its management chaos.

In October 9th, the Chongqing Municipal Bureau of industry and Commerce decided that WAL-MART would suspend business in all 13 stores in Chongqing for 15 days and fined 2 million 690 thousand yuan for involving illegal pork posing as ordinary pork and fraud by fraudulent goods.

Meanwhile, the Chongqing police announced that they had arrested 37 people involved in the "green pork" incident, of which 25 were detained by criminal detention. The deputy general manager and fresh Minister of WAL-MART Kowloon Plaza were formally arrested.

WAL-MART was hit by what the media called Chongqing.

Since entering Chongqing in 2006, it is believed that there are sales of expired food.

Wang Wei, director of the affairs of WAL-MART Western Areas Ltd, said that at present, the head office had sent the Commissioner to Chongqing and set up a special group for this matter. WAL-MART will actively cooperate with the departments of industry and commerce, public security and other departments.

The first financial weekly interviewed in Chongqing learned that the trainers sent by China's headquarters are retraining Chongqing staff on rules and standards.

In addition to mobilizing 60 managers from Chongqing to assist in the rectification, Chongqing WAL-MART has also set up a new food processing team, including a thorough investigation of the validity period, shelf life and other food packaging, and strengthening the management of organic and green food.

This is not the end of the matter.

In October 17th, Chen Yaochang, President and chief executive officer of WAL-MART China, announced that he resigned for personal reasons.

Subsequently, the president of the China region was temporarily appointed by President and chief executive of Asia.

Although WAL-MART said that Chen's departure had nothing to do with the WAL-MART incident in Chongqing, it was certain that he was paying a price for a series of events that took place during his tenure.

A WAL-MART Chinese says Chen Yaochang's tough and independent style does not integrate with WAL-MART's culture.

Chen Yaochang joined WAL-MART in November 2006 and came from Hongkong milk group. He has his own way of doing things.

From 2007 to 2009, WAL-MART implemented the "personnel optimization" scheme, which reduced the store management level from 5 to 4 levels, plus the subsequent downsizing, which affected more than 10 thousand employees.

Disappointed, employees in Shenzhen, Shanghai, Qingdao and other places at that time sought help from local trade union organizations, which is the most serious employee group rebound in China since WAL-MART entered China in August 1996.

More changes took place after 2010.

"WAL-MART has a very good process and division of labor inspection mechanism, but after Chen Yaochang took office, WAL-MART paid more attention to performance."

A person close to WAL-MART said that on the one hand is the shortage of manpower brought about by the expansion of the two or three line market, on the one hand, the resettlement of the old staff and the change of the New District purchase, all of which can deform the original WAL-MART system.

Since WAL-MART entered China, all the commodities needed were purchased by the purchasing center of the company and sent to the stores through the unified distribution center.

Beginning in March 2010, WAL-MART China formally implemented large regional system and set up large areas such as North China, East China, Southern China and Huaxi.

But that didn't make WAL-MART any easier.

The purpose of procurement decentralization is to make the commodity structure of the store better suited to the local market. However, because there is no uniform standard, the problem begins to appear: different procurement policies lead to different work modes, and the lack of self-discipline of the procurement staff makes the products frequently appear problems.

At the beginning of this year, WAL-MART began to learn from Carrefour, raising the entry fee and increasing the rate of deduction.

Since WAL-MART's performance in China was not satisfactory since 2011 and the sales target had not been fulfilled, the US headquarters in the second quarter required that Chinese companies have to save $about 2000000 in cost, but at the same time, the sales target is still improving, which partly constitutes a driving force behind WAL-MART's recent problems.

Not long ago, WAL-MART was punished by the Chinese government because of the problem that the price of small ticket did not match the price of the shelf.

Under such circumstances, the WAL-MART incident in Chongqing became the trigger for Chen Yaochang's resignation.

But this obviously does not constitute the reason why Chongqing has imposed such a heavy punishment on it.

With ordinary pork posing as "green pork", social harm is not so large that it is necessary to shut down all stores and use criminal means.

Chongqing morning post, a local media in Chongqing, reported that Chongqing is "exploring the illegal operation of food safety," a joint venture system, a company has problems, the company's parent company and other branches, upstream and downstream businesses were punished.

Obviously, this is contrary to the principle of proportionality between punishment and violation and the principle of "responsibility".

Behind the sports law enforcement is also reflecting the absence of routine supervision, which is the root of solving the food safety problem.

This will also make the business environment of a place full of uncertainty.

Chongqing is one of the fastest growing retail markets in China, where WAL-MART has opened 13 stores in 5 years with a total investment of more than $80 million.

The total annual procurement volume in Chongqing is close to 550 million yuan.

WAL-MART even hopes to set up a high-end shop Sam membership store.

Because of this consolidation, WAL-MART's expansion plan was also suspended.