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Wal-Mart Expands China Operation

The world's biggest retailer of consumer goods, Wal-Mart, is both a huge buyer and seller of products in China. VOA's Barry Wood visited a Wal-Mart store in Shenzhen, the Chinese city adjacent to Hong Kong, and spoke to the company's chief of operations for all of Asia.

Joe Hatfield has been with Wal-Mart for 31 years, 11 of them in Shenzhen, China, where he typically works a 12 to 14-hour day. A chain smoker who never went to college, he wears a tie but no jacket. The only word on his name tag is "Joe."

In this city of seven million people just across the border from Hong Kong, Wal-Mart operates 11 retail stores. They are the large big-box buildings typical of Wal-Mart stores worldwide.

Mr. Hatfield is presiding over a major expansion. With 47 stores in China, Wal-Mart is in the process of doubling its China operations. Its work force of 25,000 is likewise expected to double during the next two years.

Strolling through his well-stocked, modern Shenzhen facility, Mr. Hatfield points outside to explain the latest expansion plans.

"This whole area in between will be an atrium, an enclosed open-air atrium," said Joe Hatfield. "Because our associates do a great job with retail-tainment. They will have karaoke and fashion shows outside. And customers buy out of the deli and go outside and eat and spend time just relaxing and everything."

In the next aisle over, shoppers push their carts past several local women presenting a craft show.

China is where U.S.-based Wal-Mart is expanding fastest. But Mr. Hatfield says there is no shortage of American companies that, like Wal-Mart, see fast-growing, consumer-focused China as a tremendous opportunity.

"I mean Pizza Huts are in cities that I would have never thought about here in China today," he said. "That I would have never dreamed of, in these smaller cities. And they are starting to open up Taco Bells. If you look at Starbucks, I mean what they envision occurring in China and all. And what it does is increase shareholder wealth. And many of those shareholders are based in the U.S."

I ask Stanley Yu, Wal-Mart's chief operating officer, a man in his 30s who grew up nearby, whether he thinks Mao Tse Tung would approve of this American-style consumerism. Without hesitation, Mr. Yu says Chairman Mao would be very happy with today's consumption-driven China.

"I tell you, 10 or 20 years ago, you walked along the streets of China and everybody dressed in gray, dark blue, ugly looking colors," said Stanley Yu. "One color...gray, white... nothing else. Do you think people did not want color? They like it, no, they could not do it. They were afraid. If he [Mao] walked through [this store] he would say wow, see the excitement. He would be very, very happy to see that Chinese people can keep up with the rest of the world."

At the main entrance, 30 red shirt-clad employees called "associates" in Wal-Mart jargon, assemble to sing a company song and shout slogans.

To an outsider, the scene is similar to the images of young Red Guards singing Mao's praises during the Chairman's Great Proletarian Cultural Revolution. It is also a manifestation of the outside influences that have steadily invaded China since Mao's successor, Deng Xiaoping, moved away from Mao's extreme inward-looking policies in 1978.

As it is in the United States, Wal-Mart is controversial in China. In America it is criticized for its opposition to unions, relatively low wages and its destructive impact on small-town business.

In Hong Kong, some business executives complain that Wal-Mart squeezes its suppliers, insisting on cost reductions that shave the profits of its local partners. Wal-Mart operated in Hong Kong during the 1990s, but closed its Wal-Mart and Sam's Club stores after just a few years.

As a buyer of Chinese products for U.S. stores, Wal-Mart is a major player in ocean shipping and airborne freight. South China provides more products for Wal-Mart than any other place in the world. Paul Woodward is this year's treasurer of the American chamber of commerce in Hong Kong.

"They are an organization that is almost as big as many medium-sized countries," said Paul Woodward. "They have an awfully lot of power in the market place. They are buying vast amounts of what is made inside China."

The invasion of Chinese goods into the United States has prompted claims that the national currency is undervalued, and threats of punitive (28-percent) tariffs if Beijing does not do something about it.

Wal-Mart's Joe Hatfield thinks that would be folly. A punitive tariff, he says, would simply punish American shoppers.

"Christmas tree lights used to be made in Japan," said Joe Hatfield. "Then they moved to Taiwan. Then they went to Thailand for a short period of time. And they arrived in China because this truly is a global economy. There are no light sets made other than in China. Why should we make them be 28 percent more expensive for the American public? I do not agree with that."

For now, Wal-Mart's Chinese expansion has the enthusiastic support of China's government. Mr. Hatfield foresees a binding, complementary relationship developing between the United States and China. China's emergence into the world economy, he says, is only beginning.