Andy Rowell, 24 April 2007

For years, the American retailer, Wal-Mart has been known as the “Beast of Bentonville,” that in its fight to be the world’s largest company, destroys jobs and local communities.

Wal-Mart’s critics have long argued that there is a huge ecological, social and financial cost to its vast international operations.

But still the company keeps on relentlessly expanding: it now operates in 7,000 stores in fourteen countries and has targeted Asia and Central and South America as strategic regions for its growth. It is also eyeing a possible entry into Russia.

But it is its rapid expansion into China that is catching peoples’ attention. In February Wal-Mart paid a reported $1 billion for a 35 percent stake in the Taiwan-based Bounteous company. Bounteous operates 101 hypermarkets in 34 Chinese cities under the discount Trust-Mart brand name. Wal-Mart plans to acquire total ownership of the chain by 2010 if the right economic conditions apply.

China is a hugely strategic market for many international companies. Its economy is growing at over 10% a year and by 2020 the retail market could be worth $2.4 trillion. Should Wal-Mart complete the takeover, Wal-Mart would overtake Carrefour of France in the number of giant discount stores in China. "Through this investment in Trust-Mart we have the opportunity to expand our presence in China, one of the world's fastest growing retail markets," Wal-Mart's vice chairman, Michael Duke said.

China is not the only market in Asia that the American company is expanding into. Just days before the Chinese announcement, Wal-Mart’s Indian partner, the Bharti group, announced that it would spend up to $US2.5 billion on a hypermarket and supermarket chain it planned to operate with the support of Wal-Mart.

Indian regulations ban foreign companies from owning multi-brand stores such as Wal-Mart. Under the plan Bharti will have 100 per cent ownership of the front-end stores and will form a 50:50 joint-venture with Wal-Mart to provide wholesaling and logistics.

The partnership between Bharti and Wal-Mart is causing huge concern in India that large foreign-owned retailers will wipe out the country’s small store owners, putting millions out of work in the process. The head of the ruling Congress party, Sonia Gandhi, has now sent a letter to India’s Prime Minister, Manmohan Singh urging the Government to consider what impact the entry of international operators such as Wal-Mart might have on small-scale retailers.

The deal is causing an outcry on the streets. When Wal-Mart’s Michael Duke, arrived in the country last month he was met by protesting demonstrators who marched on government buildings in New Delhi, burning a Wal-Mart effigy in the process.

One Indian newspaper commented that “The Wal-Mart-Bharti tie-up has got a disparate range of groups worked up, from Indian retail entrants who see a threat to their business, to the Left which is worried about the impact on small businesses. But Brand America is also about America’s imperial outreach, bullying unilaterism and sheer size”.

Indeed Wal-Mart is one of the most grotesque examples of “Brand America.” It is a new imperial company with a huge size and massive international outreach that is forcing an American monoculture on the world. There is a dirty downside to the company, not least its destruction of cultural diversity.

Opposition to the company started with communities back home in America. The company built its success in the US by opening up new huge stores on the edge of town, on so-called “green belt” land. So Wal-Mart’s introduction vastly exacerbated “urban sprawl”, pushing America’s towns further and further into the countryside, and forcing consumers to drive to their stores, attracted by Wal-Mart’s low prices.

But low prices come at a high cost. In the process, local shops suffered as Wal-Mart used brutal economics to undercut the opposition. An employee slogan was “Stack it deep, sell it cheap, watch it fly and hear those downtown merchants cry”. And cry they did. Across America as Wal-Mart expanded, local stores could not compete and went bust, in their droves. One academic study found that for every job created at Wal-Mart one and a half jobs were destroyed elsewhere.

In a town, once Wal-Mart had effectively secured a monopoly it would then raise its prices again. It was a pattern the company repeated across America. Hundreds of communities suffered when Wal-Mart came to town. “People have lamented for years that Wal-Mart is scarring the face of home-town America” argues Al Norman, one of the company’s fiercest critics, who fought Wal-Mart in his hometown of Greenfield, in Massachusetts.

What jobs the company did create were often low-paid. The company has consistently been criticized by labour unions at home and abroad. In the US, the 1.3 million strong United Food and Commercial Workers Union even runs its own anti-Wal-Mart website called “Wake Up Wal-Mart”. The website argues that “Wal-Mart has let America down by lowering wages, forcing good paying American jobs overseas, and cutting costs with total disregard for the values that have made this nation great. Wal-Mart has needlessly exploited illegal immigrants, faces the largest gender discrimination lawsuit in history, forced workers to work in an unsafe environment, and -- incredibly -- broken child labor laws”.

Indeed, last year Wal-Mart was caught in 85 violations of America’s child labor laws. The company was fined a paltry $135,000 and allowed to claim it had done nothing wrong. Also last year, an investigation by the National Labor Committee (NLC) at just one plant in Bangladesh that supplies Wal-Mart and other leading retailers found that some 200 to 300 children, some eleven years old or even younger, were sewing clothing.  “The children report being slapped and beaten, sometimes falling down from exhaustion, forced to work 12 to 14 hours a day, and even some all-night 19 or 20-hour shifts, and often working seven days a week, for wages as low as 6½ cents an hour”, reported the NLC.

Wal-Mart has exported bad labour practices abroad too. The global trade union for commercial workers, Uni-Commerce, argues that Wal-Mart is an “obsessively anti-union” company at home and abroad. “Worldwide, Wal-Mart is the most serious threat to employment, wages and working conditions in commerce”.

Indeed, Wang Zhaoguo, China's top trade union leader has expressed serious concerns over low rates in trade union organising in China's enterprise sector. He believes Wal-Mart is a particularly bad example and argues that legislation might be needed in China to force Wal-Mart to allow local union organising.

Everywhere it goes Wal-Mart runs into trouble. Now it has run into trouble at home too. Back home in America it has literally saturated the US market with too many Wal-Marts. Now often when it opens a new store it quite often just siphons profits away from other Wal-Mart stores that are close by. One part of the company hurts another just to survive.

Also its very core business value that it has survived on for decades -  pile it high and sell  it cheap — is no longer enough. American competitors have fought back against Wal-Mart with smarter fashions and sleeker electronic goods, reclaiming badly needed market share.

Consumers and communities are fighting back too. Stacy Mitchell, author of “Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Businesses” argues that since 2000, over 200 big-box development projects like a Wal-Mart store have been halted by groups of ordinary citizens, and scores of towns and cities have adopted laws that favor small-scale, local business development which limit the proliferation of chains.

In an important decision, the California Supreme Court ruled last year that cities and counties could forbid the construction of large Wal-Mart hypermarkets. The California Supreme Court ruling could have important effects on the retail giant's future expansion in the US.

In recent months like most companies, Wal-Mart has tried to paint a green gloss on its operations. Earlier in February 2007, Wal-Mart CEO Lee Scott unveiled something called “Sustainability 360” that was called a “company-wide emphasis on taking sustainability beyond reducing the company’s direct environmental footprint to engaging Wal-Mart’s associates, suppliers, communities and customers”.

Scott said “We all have an opportunity to be more sustainable. But even more, we have a responsibility. We need to be sustainable companies and countries made up of people who live sustainable lives.” But Wal-Mart is far from sustainable in many ways from its labour practices to its impacts of communities, to its global sourcing of products, no matter the ecological cost.

People need to stand up and resist this brutal expansion of American commercial muscle. “Wal-Mart is Americanising retailing around the world”, argues Al Norman. “It is a really undesirable outcome both culturally and economically for a US company to be exercising so much power”.