Wal-Mart stores are not just another retail store chain; during the past 50 years, it has become a global force. Some people think that Wal-Mart helps people by offering them the lowest prices in the market. But what does Wal-Mart have to do to beat its competitors’ prices? The answer is purchasing its products from the cheapest suppliers. This creates a whole chain reaction in the U.S. Economy. I believe that as times goes by Wal-Mart is making China the world’s biggest economic power, moving companies overseas, and raising the lower class population.
Wal-Mart concentrated its attention on China a long time ago. According to Duke University professor Gary Gereffi “China is the largest exporter to the U.S. economy in virtually all consumer goods categories”. Approximately 80% of Wal-Mart’s suppliers are Chinese. Wal-Mart is known in the business industry for being a tough negotiator, and often suppliers cannot resist being on the shelves of Wal-Mart’s 3,500 stores. “You give them your price, if they do not like it they will give you theirs” said Carl Krauss owner of Lakewood Engineering & Manufacturing Co. Wal-Mart was attracted to China because of the low labor cost which is about 25,35,50 cents an hour, compared to $10, $15, $20 an hour. American companies can compete with China, because Chinese exporters still have to add the cost of shipping.
Wal-Mart has warned U.S. Manufacturers to better move their plants to China if they want to stay open for business. And as if that was not enough, Wal-Mart does not support American companies. Top Hopson president of CEO of Five Rivers Electronics which produces big screen televisions, filed a law suit against several Chinese companies for “dumping products” which means that they were selling below cost. Hopson analyzed the cost of the products made by the Chinese and came to the conclusion that it was impossible for them to sell their products for such lower prices without going below the cost of production. The electronics market has a 5 to 6 percent of degradation every year, prices, cost go down; but Chinese products entered the market 15 to 20 percent lower. American companies cannot compete against that, because they cannot make enough improvement in such short time to lower their cost. For a strange reason Wal-Mart Stores Inc. stood up for them in court. Nevertheless, Hopson won the case and Chinese exporters were forced to raise their prices. According to Tom Hopson, he would not have been able to keep his company open if he had lost the case.
Wal-Mart has about 1.2 million U.S. employees; most of them make less than $9 an hour. Some of them used to work on companies that were closed because they could not compete against the prices of Asian suppliers. According to an article published by the New York Times, “When a super center moves into town, competitors often are wiped out, taking high paying Union jobs with them”. Wal-Mart’s wage is not the only matter for its employees, healthcare, pension, and job security benefits are missing. Wal-Mart policies forbid employees to gather, if any of them sees suspicious activities, he/she is encouraged to report it to the nearest supervisor. According to a Frontline report on Wal-Mart “At every Wal-Mart store thermostats are kept at a steady 73 degrees in summer, 70 degrees in winter; raising or lowering the temperature is considered a waste of money”. Last December Wal-Mart was accused of forcing its employees to work overtime without pay, the jury determined that Wal-Mart’s behavior was illegal and willful. Wal-Mart has paid similar suits in other states, and yet, more than 40 cases are awaiting trial. Wal-Mart does not want its American workers to unite, because it wants to keep their complains unheard.
Wal-Mart supporters believe that Wal-Mart contributes a lot to America, but the thing is, they are missing the big pictures. “If you want these low prices, then you go buy your products from Wal-Mart. But what does that actually do for this country? It is putting people out of work. And it is lowering our standard of living. That is the bottom line” said Steve Ratcliff who became unemployed when the RCA plant in Circleville, Ohio shut down.
Wal-Mart is eliminating the middle class, and eventually will transform this country into a second world, because the American capability of consuming will be reduced to a bargain potential. The saddest part is that Wal-Mart’s founder is an American, people say he is living “The American Dream”, and I think they are right, because money is concentrated in only one person, only him; but not us. The American dream will be reduced to a cheap illusion, maintained with low quality products, made in China.