Walmart Inc., the world’s largest retailer, was the youngest Western company to be scrutinized in its dealings with Xinjiang following the passage of a U.S. law banning virtually all imports from the northwestern China region on the grounds of forced labor and human rights concerns .
The Bentonville, Ark.-Based retailer aroused anger on Chinese social media earlier last week after netizens shared comments allegedly showing that Walmart is stocking Xinjiang products at its China-based Walmart and Sam’s Club business had ceased. Some said they had quit Sam’s Club while social media accounts run by Communist Party-backed entities criticized the company.
Northwest China’s Xinjiang, home to millions of mostly Muslim minorities, has become a geopolitical hotspot and ethical dilemma for US multinationals doing business in China. The Biden government accuses the Chinese government of genocide against religious minorities in the region.
Last week, President Biden signed the Uyghur Prevention of Forced Labor Act after it was passed almost unanimously in Congress. The law prohibits all imports from the region into the US unless companies can certify that such products are free from slave labor.
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China has denied genocide and forced labor allegations and has directed its policies in the region as being to prevent terrorism and protect national security.
Last week, US semiconductor giant Intel Inc. apologized to Chinese consumers, partners and the public after an outcry on Chinese social media against the Santa Clara, California-based company that posted a letter to suppliers on its website which they were asked to avoid getting from Xinjiang. The original letter stated that the restrictions were required in response to U.S. law, but it did not specify which law.
Other Western companies, including fast fashion retailers H&M Hennes and Mauritz AB and sportswear maker Nike Inc., have also recently been targeted by Chinese consumer anger. H & M’s online presence was deleted from the Chinese Internet this spring after the Swedish clothing company announced it would stop sourcing from Xinjiang.
For its part, Walmart was drawn into the controversy on Friday after users on domestic social media platforms – including Weibo, a Twitter-like microblogging service, and Zhihu, a Quora-like question-and-answer forum – posted that they were products normally sourced from Xinjiang cannot be found in online Walmart and Sam’s Club China stores. Sam’s Club is Walmart’s wholesale member-only chain.
Some users said that online customer service agents had told them that such products, including red dates and apples, were out of stock. An American Walmart spokesman declined to comment.
The Wall Street Journal found no Xinjiang product lists in the Walmart and Sam’s Club Chinese e-commerce stores. However, during a visit to a Walmart store in Beijing’s central business district on Saturday, red dates from Xinjiang were still on store shelves.
One Weibo user accused Walmart of “eating China’s rice but slapping us in the face” while others said they were terminating their Sam’s Club membership and sharing pictures of their dialogues with customer service agents showing them how to terminate their contracts . Others said they were boycotting Walmart stores.
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Chinese social media campaigns are often not as organic as their overseas competitors as government agencies and tech firms curate and censor domestic online content.
Walmart’s internet backlash followed a playbook similar to previous nationalist boycott campaigns on Chinese social media. The Communist Youth League’s social media account urged consumers to boycott Sam’s Club’s business, while the state-run Global Times reported that Sam’s Club had stopped selling Xinjiang products, citing unnamed sources.
The Global Times reported that melons – commonly known as “Hami melons” in China, after a city in eastern Xinjiang famous for producing the fruit – are now sourced from the southern Chinese island of Hainan. It quoted a seller in a Beijing store who said that Xinjiang raisins had not been on the shelves since May, although the employee did not know the reason.
Melons, red dates and grapes were among the largest fruit crops in Xinjiang in 2019, according to the latest figures on the region’s statistical office website. Xinjiang is also China’s largest cotton-producing region, which accounts for nearly 90% of the country’s cotton production, according to China’s Ministry of Agriculture and Rural Affairs.
China is a key pillar of Walmart’s international expansion strategy as the American retail giant seeks to streamline its operations to focus on e-commerce and the fastest growing global markets.
China was home to 434 Walmart and Sam’s Club stores, spanning over 69 million square feet as of late January. According to the company’s latest annual report, China is the country’s second-largest international market by square footage only after Mexico, where the big box retailer operates almost more than 2,600 stores.
In the last quarter, China proved to be a ray of hope for Walmart’s international sales, Walmart President Doug McMillon told investors on a conference call last month.
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The American Chamber of Commerce in Shanghai announced in September that 30% of retail and consumer companies polled in its latest corporate survey cited public backlash and consumer boycotts as top concerns, the highest among the major industries covered by the business lobby. More than a tenth of companies said they had cut planned investments in China out of concerns about consumer boycotts.
Ever since Walmart’s online sourcing of Xinjiang products attracted attention, competitors such as Alibaba Group Holding Ltd.’s Hema supermarket chain have been rushing to the bottom. to the US retailer. Most noticeably, Carrefour SA, whose 200+ stores in China are owned by domestic online retailer Suning.com, shared a post with the hashtag “Carrefour Xinjiang Fine Goods Festival” with images of products from Xinjiang store shelves.
The social media post on Carrefour’s official Weibo account contained nine photos of apples, walnuts, and cotton socks and towels for sale on store shelves with bright yellow labels that said, “I’m from Xinjiang.”
A Carrefour spokesman in France did not immediately respond to a request for comment. Suning did not respond to an email sent to his board secretary after work hours.