Wed, Aug 30, 2006 - Page 9 News List

Wal-Mart may be too American for global success

Outside its homeland, the company formula mirrors that of US foreign policy: brash, bold and increasingly unpopular

By Richard Adams  /  THE GUARDIAN , LONDON

When Thomas Friedman -- the US journalist who has become globalization's loudest cheerleader -- wanted to illustrate the powerful forces at work in the world economy, he got on a flight for Bentonville, Arkansas, headquarters of the glory that is Wal-Mart.

In his hagiographic best-seller, The World Is Flat, Friedman records his awe while standing in the middle of Wal-Mart's operation center in Bentonville, watching the movement of goods at the heart of the world's largest retailer, which last year recorded more than US$300 billion in sales from 6,600 stores in 15 countries, including the Asda chain in Britain.

"Call it the `Wal-Mart Symphony' in multiple movements -- with no finale," Friedman wrote in his trademark breathless prose.

"It just plays over and over 24/7/365: delivery, sorting, packing distribution, buying, manufacturing, reordering, delivery, sorting, packing," he wrote.

Friedman was so impressed that he named Wal-Mart as one of the biggest forces driving globalization, saying: "It's role as one of the 10 forces that flattened the world is undeniable."

But recent history has not been kind to Friedman. As the leading foreign affairs columnist for the New York Times, he was an influential voice in the ear of east-coast liberals, supporting the neoconservative arguments in favor of the invasion of Iraq and the toppling of Saddam Hussein.

Recently, as Iraq's descent into bloody civil war has made a mockery of cruise-missile liberals, he has had the sense to recant. But Friedman's pin-ups for globalization haven't fared so well either. The computer manufacturer Dell, lauded to the skies in The World Is Flat, belatedly found that its laptops included a built-in cigarette-lighter feature when their batteries began bursting into flames.

Now it is Wal-Mart's turn to suffer the curse of Friedman. Since his book was published it seems that little has gone right for the champion of globalization

In recent months the giant retailer -- at the start of this year the world's second largest corporation by revenue after Exxon Mobil -- has suffered a string of defeats. Some have been self- inflicted, but others are a sign that Wal-Mart's attempts to export its formula of massive purchasing power and cheap imports from China, combined with stringent cost-cutting and aggressive anti-unionism, are beginning to fail.

The first sign that Friedman's steamroller of globalization was stalling came in May, when the company announced it was pulling out of South Korea. South Korea was one of the first countries Wal-Mart moved into outside North America. But its all-American model of piling very high and selling very cheap never appealed to consumers there.

"It failed to read what South Korean housewives want when they go shopping," a local analyst told the New York Times.

Last month, the company announced it was also withdrawing from Germany and selling its 85 stores there, despite pouring in hundreds of millions of dollars over the years to compete with local chains such as Aldi.

German customers were turned off by the enforced friendliness of its employees, while the employees objected to US imports such as chanting at morning staff meetings: "Who's number one? The customer."

In the UK, Wal-Mart has also run into trouble with its Asda subsidiary, which it bought in 1999 and now has more than 300 stores and 160,000 employees. Last month the threat of a strike by the GMB general union led the company to make unusually significant concessions, agreeing to allow the union access to Asda depots and to participate in a process leading to collective bargaining.

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