Saturday, November 5, 2011


An avoidable conflict was precipitated recently in China between the government and some MNC retailing industry on the issue of malpractices indulged in by the latter in selling products which were date expired or mislabeled. The speed with which the dispute was resolved smacks of a "bending backward" attitude on the part of the retailers accused, probably realizing that in a dictatorial country like China, might is right and not the legal route because of the all pervading power vested with the government. If these retailers have really indulged in such malpractices as being accused of and if they are admitting to be guilty, what credibility they can have in other countries.Now that India is about to open its retail sector to international giants, it may be desirable to quiz them regarding their integrity before allowing entry into the country. Such deceitful players should not be allowed to exploit the illiterate and not so well informed citizens through sale of unacceptable food products. The Chinese episode is interesting for any student of management if the dynamics of functioning of MNCs are to be understood clearly.

"RETAIL giants Wal-Mart China and Carrefour China have apologized for selling food that had expired in Changsha, capital of central China's Hunan Province. The Changsha Administration for Industry and Commerce investigated a Wal-Mart and a Carrefour store following complaints that expired frozen rice dumplings and shrimps were sold there, the Economic Information newspaper reported. Officials said suppliers altered the production date to prolong their shelf life. On a bag of rice dumplings produced in Hangzhou, the supplier printed a sell-by date four months later than the genuine one. The administration has confiscated the expired products and ordered the suppliers to refund buyers 10 times the sum they paid. Wal-Mart China and Carrefour China were also each fined 10,000 yuan (US$1,567) for turning a blind eye to the illegal practice. Wal-Mart has promised to recall unsold products. Supermarkets return packaged foods which are close to the end of their shelf life to suppliers. But a practice has emerged where suppliers alter the date and return goods to retailers again, the report said. Officials blamed supermarkets for not being "gatekeepers." Changsha authorities said similar cases are common and that they recently apprehended workers altering the production date of a beef product. "The supplier instructed it," an official was quoted. A dealer selling code printing machines, who asked not to be named, told the newspaper that most codes could be altered. A print machine costs no more than 20,000 yuan (US$3,134), another dealer said. In southwest China's Chongqing, authorities discovered that since the beginning of this year Wal-Mart stores have sold more than 1,000 kilograms of ordinary pork as organic produce at higher prices. Wal-Mart is said to have made 1.9 million yuan from the practice. The Chongqing government shut 10 Wal-Mart stores that were involved and fined Wal-Mart China 2.69 million yuan. Police questioned 37 people, 25 of whom were detained.
Chongqing officials have pulled up Wal-Mart stores 21 times for false advertising and selling shoddy produce since it opened its first store there in 2006, including eight times this year alone".

Whether Chinese rules and regulations are too harsh to adhere to or the retailers accused had really indulged in unethical marketing practices is a point on which jury is still out. From a common sense, it is difficult to believe that any reputed retailer with global operations will resort to such illegal activities for short term gains. The callousness of the employees and/or industrial sabotage also could have caused this embarrassment but it is for the concerned organization to bring better clarity on the issue. On the other hand if the defaulters are really responsible for the "crimes" committed, the action of Chinese Government serves them right. In India also there are credible reports that many retailers managed by Indian entrepreneurs are indulging in selling of date expired products blatantly because of lax implementation of the food laws by local authorities. Also prevalent is the practice of many manufacturers to accept date expired products back from retailers and either repack or re-stamp the dates after erasing the old ones. They do not realize that date expired products can be inferior to newly manufactured ones and can even be dangerous putting the consumer life at jeopardy. What about the hit they take on their reputation and the brand built up over the years? Probably these culprits must be depending on the philosophy that consumer memory is short and most consumers are suckers! Only awakened consumer community can prove them wrong.


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