Wal-Mart is currently the largest discount retailer in the world, but before becoming number one in the industry Wal-Mart began in the small town of Bentonville, Arkansas to a population of only 2,900. Sam Walton had a vision of providing people with the best merchandise for the lowest prices possible and thus in 1962 Walton, along with his wife, put up
95% of the capital and opened the first Wal-Mart. Walton knew that in order to provide the lowest prices he has to achieve the highest sales volume by keeping sale prices lower than the competition and he could only do this by reducing his profit margin. By 1967, Wal-Mart had 24 stores across Arkansas with over $12 million in sales. Today Wal-Mart has over 9,500 stores in
28 countries with over 2 million associates, 176 customers a year and over $350 billion in sales.
In 1996 Wal-Mart enters into China through a joint venture with visions of providing the same excellent service they have been providing for over 40 years. This brings me to the situation at hand of China’s sustainable operations strategy. Customers patronize Wal-Mart
China stores because they have very low prices which are great assets to china’s customers who are more cost sensitive than other countries. China’s customers go to store after store to find the cheapest price and of course Wal-Mart contains those low prices. Wal-Mart also concluded through studies and research that China’s customers valued great customer satisfaction which in return they displayed their loyalty by coming back over and over. The article mentioned that the greatest determinant of the satisfaction was made up of perceived values. Some of these perceived values included product price, relative price, and promotion. Other factors for determining customer satisfaction are image, merchandise, and shopping environment. In order for Wal-Mart to be success they have adopted the strategy of “Go Native” (Gereffi), which involves Wal-Mart adapting to the locals. Wal-Mart used to sell fresh meat in China like they would in America, but to Chinese, fresh means that it’s still moving. (Gereffi) So in order to

accommodate they bought Chinese wet markets indoors. (Gereffi) All of these factors combined give evidence to why customers patronize Wal-Mart China stores. Sustainability means everything to customers in China because like mentioned before customers are loyal to the companies in which they interact with. If you want customers to go back to your stores in China, you have to sustain the great service expected from the customers. China’s customers are not to kind on change, but as long as you provide the best service possible over and over they will continue to comeback.
Wal-Mart also has to consider sustainability when deciding who their vendors will be. In order for Wal-Mart to be as successful as they are, they have to have top of the line products from top of the line vendors, so reliable vendors is a must. As mentioned in the case, there were complications between Wal-Mart and the vendors specifically when it came to the Return to
Vendors Programs. There was no control over the time the vendors had to collect the products that were unusable or destroyed which was supposed to be no longer than 14-days, but was rarely followed. The Chinese stores saw slow selling items enter a “reverse logistic” process with the products stored at the Distribution centers. In order for Wal-Mart to implement sustainability to the vendors, they first have to enforce the “Return to Vendor” program or get rid of it all together because the longer the items sit in the warehouse the more money it is costing Wal-Mart and the less space they have to put merchandise that is not defected or damaged.
The distribution system for the United States and China are very different. Almost all of the sales that Wal-Mart had for its stores in the US passed through distribution centers, but less than half was the case for its stores in China. This was happening in China because the fresh foods such as: Fish, vegetables, bread, and fruits were being supplied directly from the supplier to the various supercenters. Other factors that affected the distribution center in China were the

fact that products coming to the supercenter were shipped in all kinds of trucking and loading configurations. This was different from the United States because Wal-Mart outsourced its trucking which provided a standard size fleet of trucks for all of its shipments. The designs for the distribution centers were also different between the two companies. Wal-Mart had just created a new design for its distribution centers so that they would be a next generation sustainable logistics center. While the distribution center in Tianjin still had standard sustainability practices such as helping its associate conserve fuel and reselling all of its used cartons, pallets, and plastic sheeting. Other differences that set the facilities apart were Tianjin lighting was supplemented by day light and T5 energy saving light bulbs which saved 20 to 30 percent on energy cost. Also solar energy water heaters provided hot water for the plants saving
25,550 kilowatt hours each year.
When it comes to improving sustainability in Wal-Mart China’s distribution and retail operations recycling and reusing damaged pallets, carton, and plastic sheeting would help cut down on cost within the distributions centers. The image that a company portrays when pertaining to creating a better environment is also a sustainability tactic used by Wal-Mart. In
China they show that the environment is a concern by providing convenient drop-off locations for batteries so that they are not placed in landfills where they give off harmful chemicals that contaminate the ground water. Wal-Mart China can also adopt the strategies used in the Wal-
Mart stores in the United States which would be providing reusable shopping bags to cut down on pollution and cost. According to (exhibit 12) China has a law that as of June 1, 2008, no free plastic shopping bags will be provided, which also requires no plastic bags to be produced no larger than 0.0025 mm.

Wal-Mart China has many regulations in place by the government that includes the proper disposal of waste. Wal-Mart China can also do everything they can in helping the government solve the sewage issue in which there are policies in place but in big cities such as
Beijing sewage water treatment only covers 30% of the city because of upgrades that are yet to take place. Wal-Mart China will show the government and employees that they are doing the best possible in advancing sustainability by showing that they are here to stay and stay in a better environment. They can also show that they care about their employees by providing incentives such as break times, vacation days, and special employee discounts because “the desire to reduce the price of labor leaves limited room for maneuver and for payment of high wages.” (Kolk)

Wal-Mart China has been around since 1996 and in the case study there were issues presented on sustainable operation strategies within China. This case starts off with Martin
Fertsch being appointed to the position of senior director for sustainability for Wal-Mart China.
Fertsch recognizes that there are many sustainability problems throughout Wal-Mart China. Wal-
Mart found it valuable to take top-performing managers and give them the responsibility of integrating the sustainability initiative alongside their current task. They labeled each idea into three categories. Quick Wins, Innovation projects, and Game changers. This study goes in to give detail on how much China customers patronize Wal-Mart and how low prices mean a lot to them because they are a cost sensitive culture. It talks about how sustainability was once on the backburner but since 2008, it became who Wal-Mart China was.
After moving forward with the sustainability in China they also decided to reorganize the
14 SVNs into 5SVNs. There were many problems that hindered Wal-Mart from being as sustainable as they wanted to be like the Return to Vendor program in which few actually followed. Many vendors would wait longer than the 14-days given to take the damaged or unusable items out of the warehouses. When it came to distribution system sustainability the center in Tianjin used many tactics to become as efficient as possible. They used natural light to cut down on kilowatt hours, they used solar panels to heat the water used in the plant and they also used T5 light bulbs to save 20 to 30 percent on energy.
Wal-Mart China was having many accomplishments in moving to sustainability but at the same time many drawbacks mainly coming from the government and how many cities like
Beijing where not fully upgraded when it came to sewage. In the end Wal-Mart is showing that they are putting a stamp on sustainability and saying that this initiative is not just for public image but to build a foundation for Wal-Mart so that sustainable growth is long-term.

What did I Learn?
Reading this case study has enhanced my knowledge on how operations are becoming more and more global and sustainability is a must if you want to survive in other foreign countries. I learned how having a coming in your host country and branching out to the foreign market can make you have to change your overall operations strategy because what the customers in the United States see as being valuable assets is not always what the customers in a another country see, in this case Wal-Mart China. This steps being taking in China towards sustainability could also be implemented in other countries as well. Wal-Mart has had issues in the past about going green and being more environmentally friendly and I believe that if they enforce the plastic bag law like China has done in the United States that would be a great leap in decreasing your footprint on the environment.
Sustainability is not just for one particular country is it something that should be implemented across the board and I was impress to see how Wal-Mart China was working towards this issue even with not being as advance as the United States in sewage, road paving, etc. When branching form the U.S. to almost any country it is understood that everything is not going to be as up-to-date as we are but if you plan on staying in a foreign country you have to demonstrate first how you can benefit the country by being there which Wal-Mart succeeded in doing and also make it happen and not just talk about.
Operations are a vital part of any business and the knowledge that I am learning in this class is only helping me in my journey of becoming that well rounded manager.

References
Gereffi, G., & Ong, R. (2007). Wal-Mart in China: Can the World’s Largest Retailer Succeed in the World’s Most Populous Market?. Harvard Asia Pacific Review, 9(10, 46-49. Retrieved from
EBSCOhost
Kolk, A., Pan, H., & van Dolen, W. (2010). Corporate social responsibility in china: an analysis of domestic and foreign retailers' sustainability dimensions. Business Strategy & the
Environment (John Wiley & Sons, Inc), 19(5), 289-303. doi:10.1002/bse.630
Wal-Mart. (n.d.). History. Retrieved 2011, from Wal-Mart Corporate: WalMart.com

Darrius James
Wal-Mart China (Case Study)
Macroeconomics
September 27, 2011