WAL-MART China'S Achievements In Fraud

"WAL-MART attaches great importance to any accusation against our company's misconduct."

In December 12th, WAL-MART responded by issuing a public statement. "Once we know that if there is any violation of financial integrity and other misconduct, the company will act swiftly, investigate and correct it in time."

WAL-MART reported that in the past two quarters, China's sales volume fell by 1.6% and 0.8% respectively, and its gross profit margin dropped from 10% to 10% in.

At present, WAL-MART has about 400 stores in China, and according to the plan of its headquarters, WAL-MART will close about 30% of its existing stores, or about 120 of them.

At the same time, WAL-MART also plans to add 110 stores to the three or four tier cities in the past three years.

Therefore, WAL-MART's China store network is about to move from a dense second tier city to a three or four tier city. Its corresponding managers and staff will also turn to three or four line cities in batches.

"If we solve the problem of human resources through all the ways of layoffs and local recruitment, WAL-MART will pay a huge price for the pformation, and it will also face legal risks if it is not handled well."

The above WAL-MART internal staff said.

But at present, WAL-MART China accounts for only 2% of its global income.

According to WAL-MART's statement, management problems in the Chinese market will not affect the financial performance of the whole company.

On the day of the "exaggerated performance event", WAL-MART's stock price rose 1.02%, to $83.83.

Just a few months ago, the UK's Tesco (Le Gou), the world's third largest retailer, had been investigated by a serious fraud Office (SFO) in the UK because of the financial fraud and its inflated performance in some parts of the UK. At least eight senior executives were suspended.

WAL-MART vulnerabilities

According to Lin, a former executive of WAL-MART China, overseas media revealed that at WAL-MART, the price tag of thousands of products was raised at the end of each month and the price was lowered at the beginning of next month. This price adjustment took up a lot of time.

This kind of price adjustment has indirectly increased performance.

For example, a store has a stock of $200 thousand worth of red wine at the beginning of the month, and the remaining $100 thousand worth of red wine at the end of the month, which costs $100 thousand.

If sales amounted to $150 thousand, the gross profit would be $50 thousand.

However, if the final inventory is raised by 20%, the selling cost will be reduced to $80 thousand, and the gross profit will be raised to $70 thousand.

This way of raising the price of commodities through the end of the month can raise the price of ending stocks, reduce costs, raise gross margins and sales.

According to Lin, in 2010, after investigating 98 WAL-MART stores, it found that wholesale sales accounted for 1 billion 600 million yuan in sales, while the price adjustment strategy accounted for 4% of WAL-MART's gross profit.

WAL-MART acknowledged in its December 12th statement that in 2011, WAL-MART employees found that there was a stock price error. WAL-MART headquarters and China's top executives had asked external law firms and accounting firms to investigate the matter. The findings have also been shared with external financial auditors. Management has been replaced and relevant personnel have been dealt with accordingly.

After that, the company adopted measures such as strengthening and adding relevant policies and operation procedures, strengthening on-the-job training of key post workers, conducting regular auditing, and communicating with management and related departments regularly.

"Our survey of China's financial situation shows that it has not had a substantial impact on WAL-MART's overall financial position or operating performance."

WAL-MART said so as to clarify the compliance of financial performance of listed companies.

On the day of 12, an internal staff of WAL-MART told the twenty-first Century economic news reporter that the price adjustment would exist, but it was not a routine operation aimed at accounting fraud, but a different person in charge of different product departments in different stores.

"If a department performs well this month or this quarter, it will not operate this way, but if it is difficult to achieve or fail to achieve the expected result, it may do so."

The above WAL-MART employees said, "in 2011, the company was punished by the national development and Reform Commission for price fraud. Since then, price management has been relatively stricter."

In addition, Lin also told the media that WAL-MART China has inflated its sales performance through illegal manipulation of wholesale sales.

Some wholesale orders are operated through the system, but the goods on the shelves do not sell substantially. Such sales make the sales data falsely high and distort the data of the profit table.

According to WAL-MART's statement, large single sale or wholesale is a common practice for retailers in developing markets, usually serving small informal retailers or small retail outlets.

At present, this kind of sales form is relatively low in China's business.

Although WAL-MART did not disclose its volume of wholesale business to the public, but in twenty-first Century, the economic news reporter learned from WAL-MART that WAL-MART China has been strengthening this business. "WAL-MART's biggest advantage is not only the global supply chain supporting retail outlets, but also the powerful ball sourcing business".

The above internal staff said, "making full use of global sourcing advantages and enhancing wholesale business is one of the development directions of WAL-MART China. Now the company's investment in Sam's member stores is also in line with this business. Many of the large packaged goods in Sam are wholesale nature."

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It is believed that in a certain period of time, wholesale operation does exist in terms of performance space, because there is time difference between orders and goods out of stock, and if the time point of performance is met, the performance of the order can be included in advance.

But for a long time, it is still very difficult to make false accounts, because the system order and inventory goods will still be on the top of the list.

Aiming at loopholes in the company system,

In recent years, the company has increased investment in ensuring compliance, and hopes to use strong financial support and institutional guarantee to prevent and detect any possible problems and correct them in time.

The above WAL-MART staff analysis, in the domestic retail industry, the overall management of Wal-Mart Store Inc is still partial institutionalized and standardized. "Some enterprises in the same industry may violate the situation more seriously, but now the retail market is not good. Many times, many departments and colleagues are under great pressure. Loopholes in the loopholes are unavoidable."

The employee believes that the incident should be related to the company's layoffs.

In December 2nd, WAL-MART had publicly stated that the staff of the company should streamline its business process and adjust its management structure. It will lay off 250 people in China, mainly in the procurement and marketing sectors.

"Most of the lay off staff are senior staff and senior managers, who are well aware of the company's management problems and loopholes in the system."

The above WAL-MART internal staff analysis, WAL-MART China's business is tilting to wholesale and electricity providers, traditional sales no matter sales or gross profit margins are declining, business pformation and layoffs is imperative, but this layoff storm will bring much cost and trouble to WAL-MART, it is hard to say.

WAL-MART reported that in the past two quarters, China's sales volume fell by 1.6% and 0.8% respectively, and its gross profit margin dropped from 10% to 10% in.

At present, WAL-MART has about 400 stores in China, and according to the plan of its headquarters, WAL-MART will close about 30% of its existing stores, or about 120 of them.

At the same time, WAL-MART also plans to add 110 stores to the three or four tier cities in the past three years.

Therefore, WAL-MART's China store network is about to move from a dense second tier city to a three or four tier city. Its corresponding managers and staff will also turn to three or four line cities in batches.

"If we solve the problem of human resources through all the ways of layoffs and local recruitment, WAL-MART will pay a huge price for the pformation, and it will also face legal risks if it is not handled well."

The above WAL-MART internal staff said.

But at present, WAL-MART China accounts for only 2% of its global income.

According to WAL-MART's statement, management problems in the Chinese market will not affect the financial performance of the whole company.

On the day of the "exaggerated performance event", WAL-MART's stock price rose 1.02%, to $83.83.