Evaluating Wal-Mart?s Cooperation With the Chinese Communist Party (Editorial)

It has been more than five years since this publication ran a photo showing that the Wal-Mart store in Berlin was, ironically, on Karl Marx Strasse.

Well, a business can’t always micromanage the street address of its most promising location. That German adventure didn’t work out for Wal-Mart anyway.

Now comes the news that Wal-Mart, which last year shut down a store in Canada rather than have it unionized, has capitulated to the Chinese government by allowing a branch of the Communist Party to set up offices in a store in Shenyang, an industrial city in northeast China.

This follows the announcement that Wal-Mart will cooperate with the efforts of the All-China Federation of Trade Unions — the alliance of government-sanctioned unions — to organize the company’s Chinese “associates.”

What would Sam Walton think? And does it even matter anymore? This is just the latest in a long series of fundamental changes that Wal-Mart has made in its business plan and culture in order to survive.

Wal-Mart keeps opening stores in the U.S., but in many areas of this country it is nearing the saturation point. Wal-Mart hasn’t had as much success in other industrialized countries where unionized labor is even more pervasive and other capitalists had already copied much of the low-prices-always formula.

But China is so important to Wal-Mart, as the source of much of its low-priced merchandise and as the great untapped consumer market, that its management may feel it has no choice but to cooperate with what’s left of its brand of communism.

If we believe that, ultimately, capitalism will always defeat communism in the marketplace of ideas, Wal-Mart’s decision may be viewed as merely a tactical retreat.

What will be most interesting to watch is the reaction of Wal-Mart Watch and Wake Up Wal-Mart, the union-backed watchdog groups that have been hounding Wal-Mart for the past couple of years. We predict they will criticize Wal-Mart for doing in China what they have been demanding that Wal-Mart do here at home.