1. What are the ethical issues associated with Walmart’s extensive sourcing of low-cost products from China?
There are various ethical issues associated with Walmart's extensive sourcing of low-cost products from China.
The first issue is more of an ethical character and concerns the degrading manufacturing sector in the US. And this issue is more complex that it seems from the first sight. On the surface is lack of patriotism and care for local manufacturers that have to shut down their production or move it to China to avoid bankruptcy. That itself is damaging to the economy of the State as the industry that could otherwise improve country's GDP and decrease the external debt, invests in economy of other country. That itself could be justified by the fact that competitive functioning in the globalized market is mostly possible due to the decrease of cost through moving production to a more "efficient" place. That point can also be argued, as the constant striving for efficiency leads to dumping of average market prices and negatively affects the quality of products. According to Schor, prices for apparel decreased 39 per cent since 1994 (Schor, 2005). Such brands like Levi are had to close their factories in the US and move production to developed countries to keep up with falling market prices and stay competitive. The result is much lower quality of clothing. Even though Walmart didn’t close factories itself, it is partially to blame, as price dumping and the scale of Walmarts sales endangered other companies’ profit.
The second negative effect on economy is the growing unemployment rate. As more and more retailers decide to follow Walmart's example to survive in the competitive market environment, more people lose their jobs. In short term it will lead bigger quantity of people living off welfare and more homeless people not being to pay their mortgage, in a long term it may lead to a lower purchasing power and a general slow down of economy.
Another issue will be the endangerment of people that buy low quality goods and may have long-term health issues because of that. Lack of standards and quality checks empowers retailers like Walmart to import the cheapest goods on a cost of their consumers' health and well being.
One of the external ethical issues that do not concern the US itself is the support of low working conditions in China and other countries that produce cheap goods, which is a support of modern day slavery. Many documentaries and UN reports cover the poor conditions in which people work to produce cheap goods for developed countries. People that work in sweatshops and factories all over the world are paid starvation wage so companies like Walmart can have their margin and people in the US and other developed countries can pay a few dollars less for clothes or appliances.
In addition to all the impacts mentioned above, by selling cheap low quality products Walmart stimulates consumerist tendencies of modern society. When a customer comes to the retailer’s shop and sees a very cheap product, he forgets about the quality as why to bother if one can buy a new one when it breaks. The same goes with cheap clothing. Nowadays we buy more clothes than we need, and the reason is not only ever changing fashion, but the speed with which clothes fall apart. When buying electric domestic appliances for less than $10, we don’t think about durability, as we can buy a new one for cheap once it breaks. And not only does it make people in general less responsible, but it can be dangerous for our lives.
2. Based on your experience, does Walmart sacrifice product quality in order to offer customers low prices always?
Yes, in my experience Walmart sacrifices product quality to offer the lowest price on the market. But partially the blame lies on consumers. The growing consumerism of our society encourages retailers like Walmart to do what they are doing, because people will still buy. Even though media started talking about saying starvation wages of the US Walmart’s employees, low quality of products and "sweatshops" they are produced at, consumers keep buying goods that they sometimes don't even need.
One of the ways of Walmart to decrease the price is to take a product/appliance and to make their own version of it, manufactured specifically for Walmart. This “special versions” tend to have reduced features and a customer has no way to know he got one of those until he starts using it. It can become a problem when you order online, receive something different from what you expected, contact customer service and learn that you purchased and striped down version of a product. I had an experience of buying a digital camera that turned out to lack some features I was specifically looking for. While researching for this paper, I was surprised to come across the very similar story in the Bloomerg Businessweek (Nussbaum, 2007).
Unlike Walmart, Target has its own brand “Up&Up”, that is cheaper and has lower quality products than known established brands, but the quality in my experience is significantly higher than in Walmart and at least customers know what they are buying.
3. What advice would you give to critics of Walmart in order to enhance their impact on the company? To enhance their impact on governmental and regulatory agencies? To enhance their impact on society in general?
In my opinion, the activists should start a national social campaign that will discourage people from buying Walmart's goods by showing minor and major consequences mentioned above.
The social campaign must include information about working conditions of people that work in “sweatshops” in China and starvation wages they get. This may get attention of the empathetic part of population that might feel for those workers and make a conscious decision to pay a little bit more.
Another part of campaign should inform on danger of buying low quality Walmart products that might contain toxins dangerous for people. The campaign should also touch the topic of environmental pollution done by factories in China and show its long-term effects as lower quality of products leads to growth of its production due to lower durability and shorter life of goods.
Only when consumers are educated and stop buying from Walmart, will there be a change. Only when Walmart starts loosing its profits, will it start caring about place of production and quality of its goods. Until then, governmental lobby will keep regulatory agencies powerless and retailers free to fill their shelves with low-quality goods made in factories by people who can barely survive on their salary and have to endure horrible working conditions.
Barbaro, M. (2007, May 30). Is Wal-Mart Too Cheap for Its Own Good? - New York Times. Retrieved from http://www.nytimes.com/2007/05/30/business/media/30walmart.html?_r=0
Mitchell, S. (2011, November 11). Is your stuff falling apart? Thank Walmart | Grist. Retrieved from http://grist.org/business-technology/2011-11-11-is-your-stuff-falling-apart-thank-walmart/
Nussbaum, B. (2007, February 4). Can This Be True Of Wal-Mart? - BusinessWeek. Retrieved from http://www.businessweek.com/innovate/NussbaumOnDesign/archives/2007/02/can_this_be_true_of_wal-mart.html
Schor, J. B. (2005). Prices and quantities: Unsustainable consumption and the global economy. Ecological Economics. doi:10.1016/j.ecolecon.2005.07.030