October 23, 2011

Wal-Mart’s China Food Labeling Scandal and The Joke of A WSJ Op Ed (Guest Post)

By Stan Abrams

Hmm, so many possibilities here. If you recall, I wrote about this issue earlier this month. Wal-Mart stores in Chongqing have been closed because they mislabeled pork as “organic” meat when it was just ordinarily old pig.

In my previous comments, I questioned why Wal-Mart was getting punished so harshly for food mislabeling when China has been inundated with food safety scandals that have led to multiple deaths. Stating up front that I didn’t know the answer, I ended with this list of possibles:

Perhaps Wal-Mart’s relationship with AIC in Chongqing, after constant problems over the past five years, compounded the punishment for this latest violation. Alternatively, maybe this action reflects the government’s tough new stance on food safety and consumer fraud. But yes, it’s also possible that Wal-Mart, as a foreign company, is being held to a higher standard.
Right. I think I covered my basis sufficiently well on that, the point being that all of it was complete speculation. The punishment seemed harsh, but we really don’t know the circumstances that led up to it, beyond the food mislabeling and the rocky relationship Wal-Mart has had with authorities in Chongqing over the years.

So, I wonder what some of the other folks flailing about in the dark came up with? I’m sure they were also careful to qualify their speculative musings. Right?

Well, perhaps not. If you don’t regularly partake of the literary genre I like to call China bashing, this might be your opportunity. The author is John Bussey, writing in the Wall Street Journal, and if I didn’t know any better (I read his bio), I would have thought that he just learned yesterday that there is a country called China. As it turns out, his Asia credentials are impressive, which leaves me really confused. Perhaps the column was ghost written by a toddler who recently ate some bad Chinese food?

No easy way to do this. Here’s the cringe-worthy lede:
Watching China bully Wal-Mart this week is an embarrassing reminder of a simple fact:
China, the world’s fastest growing major market, has the upper hand with U.S. business. Its array of protectionist barriers, weak rule of law, and siren-like market make events like this all but inevitable.
This state of play may also be one reason Congress is fulminating again over China’s currency.
Okay. First, the story is supposed to be about Wal-Mart, and yet Bussey jumps into some sweeping generalizations that are in no way supported. Second, whatever one’s opinion is on rule of law, what the hell does that have to do with Wal-Mart in Chongqing? Bussey is simply writing a list of China issues and attempting to conflate them with Wal-Mart’s current difficulties. Lazy bastard. Wal-Mart’s mislabeling of food was inevitable given China’s rule of law problems? Huh?

Moving on to Wal-Mart’s actual food labeling problem:
Seizing on this error at a time when inflation is a hot-button issue in China, officials accused Wal-Mart of cheating the public by charging premium prices for regular meat. They fined the company, shut down all 13 Wal-Marts in the city and jailed a number of Wal-Mart employees. The actions played well in the national media.
The facts are generally true, but what’s with the attitude? “Seizing on this error”? “The actions played well in the national media.”? Come on. This is not just cheap melodrama, it’s pretty strong speculation that is unsupported (or even explained).
There’s little if any recourse in authoritarian China when something like this happens to a U.S. company. There aren’t regular courts. Like many other U.S. firms that have run afoul of nationalist sentiments in China, Wal-Mart could only beg forgiveness. It has nearly 350 stores in China with revenue of $7.5 billion.
So Wal-Mart dropped to its knees. [my emphasis]
Um, look, this is the freaking Wall Street Journal, and this guy used to be the Tokyo Bureau Chief and the editor of the Far Eastern Economic Review! And he’s saying with a straight face (unless I just didn’t get the joke) that in China “There aren’t regular courts.” WTF? Seriously. WTF?

[No, I didn't miss the gratuitous "authoritarian" thrown in there. Surprised he didn't say "Red China."]

Now, if Bussey was making some sort of legal argument with respect to administrative law and judicial review of administrative penalties, that would be one thing. But I see no qualifiers in that ridiculous statement, and he’s obviously not making that sort of cogent argument. He appears to be condemning the entire judicial system for some inexplicable reason. For that statement alone, he loses all credibility.

But let’s move on. He also says that Wal-Mart has run afoul of “nationalist sentiment” in China. He must have pulled this conclusion out of his ass, because it appears in his column rather suddenly.

We can speculate on what exactly happened to Wal-Mart, but to immediately conclude that it ran into nationalist protectionism? Again, all I can say is WTF?

And how did Wal-Mart “drop to its knees?” The whole cultural kowtowing reference is cute, if mildly offensive, but is it at all supported by the facts? Of course not, but that seems to be SOP for this bozo. From what I’ve read, Wal-Mart was punished and is being investigated by government authorities for an infraction that it admits to. Does Bussey expect a senior officer from Wal-Mart to show up at a press conference and call Bo Xilai filthy names? Since when is following the remediation orders of a local government an example of dropping to one’s knees?

Look, I was planning on writing a bit more on Wal-Mart coverage, including what I thought was a fine, neutral job of reporting on the issue by a Wall Street Journal reporter who actually knows something about China (Tom Orlik), but this Bussey tirade has sapped me of my blogging energy.

Sorry for the language. It’s been a long day. But before I go, just what lessons did we learn from the Wal-Mart food labeling scandal? Rather obvious. Don’t let ignorant people write Op/Ed columns. I can’t believe I’m saying that about a former editor of FEER and Asia veteran, but that column was just execrable.

About The Author - Stan Abrams is a Beijing-based IP/IT lawyer and law professor. Stan has an M.A. from Johns Hopkins in International Relations, a J.D. from Boston College Law School, and a B.A. from Pomona College.  Stan maintains a blog at China Hearsay.  (EconMatters author archive here)

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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