Ｃｈｉｎａ Ｃａｎ Ｓａｙ Ｎｏ Ｔｏ Ｗａｌ－ｍａｒｔ

For all suppliers， client like Wal-mart can be God.However， it may also tum into a devil when time andtide changes.

According to the Export Department of Linaer Group，Boshan， Shandong， the company has lost its mostimportant client， Wal-mart's order for 2008 spring.Linaer's friends in the same boat include Zuobang Apparel Com-pany， Weifang， Shandong.

As the largest retailer in the world， Wal-Mart owns more than4，000 shops in domestic market in USA. Wal-Mart's global annualsales reach 300 billion dollars， 10% of which comes from theretailing of costumes.

From the 90s of last century， in order to cut down the cost，Wal-Mart turn most of its orders into Asia， and China offers 80% OfWal-Mart's products. The honeymoon between Chinese suppliersand Wal-Mart brought really a lot of sweetness to many exportersin China. Several years ago， being the supplier of Wal-Mart can bethe top event that worth greatest celebration. However， marriagecan never be a bed of roses. Many Chinese suppliers find some hardtimes with China's 8^th largest trade partner， Wal-Mart.

Do you have WaI-Mart Excessive dependencyProblem?

There is a saying that cooperating with Wal-Mart is like usingdrugs. The more you use， the more you need. When the drug istaken away， the factory may get in a real big trouble. Losing theWal-Mart's order can be a fatal strike for lots of China's factoriesand suppliers. 80% of Linaer Company's products are sold to Wal-Mart， and it's 60% with Zuobang Company.

At the beginning of cooperation， Wal-Mart would only makea small order at a very low price. If the products are sold well，Wal-Mart would make bigger and bigger orders which would takemillions of dollars. The supplier expands its factory step by stepin order to fulfill the need of Wal-Mart. Some big orders are alsovery urgent， and take all the strength of the Supplier. Gradually，the supplier loses other customers， and fall into the \"excessivedependency\" with Wal-Mart.

If the supplier has only a few kinds of products， shecan make a real big business through cooperating with Wal-Mart. However， as soon as the products are no longerpopular， Wal-Mart would cease the cooperationimmediately.

Another dilemma is that the priceoffered by Wal-Mart is getting lowerevery year even the cost raises up.Some suppliers accepted the order atvery low price， but fall into financialproblems because of marketingreasons.

He Goes Away WithoutEven Looking Back

If Wal-Mart finds out a cheapersupplier， he would change his order withouthesitation. In order to get the lowest quote price，Wal-Mart would summon all the suppliers in China togetherand let them beat down each other face to face. Some supplierscould only choose to sacrifice the profit and the benefit ofworkers.

According to Langsha Socks， the quantity of productionand order are all decided by Wal-Mart. An extreme example isthat a supplier took an order of 8 million dollars， but Wal-Martdemands several millions of bail， without guaranteeing thatthe order would not be cancelled.

What's also difficult to understand is that the contractsigned by the Wal-Mart and suppliers is \"cooperation\" but not\"purchasing\"， so even if there is no problem with the quality， andthe products don't go well， the retailers would ask for amends.

Hard Times

As Chinese Yuan's appreciation goes on， the prices of rawmaterials are also getting up， plus the wages are also gettingup， the prices for export are in the process'of revaluation.During this process， the prices of Made in China would go upwithout doubt. However， the change of the price would alsolead to the change of orders.

In fact， Wal-Mart is already looking for cheaper resources.The global supply chain of Wal-Mart is stretching to morethan 70 countries and districts. In American Wal-Marts，products from Pakistan， Bengal， Middle and South Americanare presented with those from China.

Considering the quota problem when import textileproducts from China， it's more convenient for Wal-Mart tobuy textile products from Vietnam， India， Pakistan and Turkey.Apparel， cotton and textile products from countries mentionedabove would be 10% cheaper than those produced inChina. In recent years， some suppliers who dobusiness only with Wal-Mart and other largeretailers went closed in Shenzhen.

The weak American economy，the climbing price of oil and a seriesof errors in strategies have causedthe stockpile of Wal-Mart become areal problem， this stockpile includesapparel products and home textiles atthe price of 2 billion dollars.

What's the Next?

The problem in the cooperation withWal-Mart is not exclusive when we check thecase of Chinese suppliers and other large retailers suchas Carrefour. As China has already joined the internationalsupply chain， it's important to know the \"dos\" and \"don'ts\"when coping with retailers like Wal-Mart.

How to avoid the risks while keep cooperating with Wal-Mart? The only answer is supplying not only to Wal-Mart， butalso to Carrefour， Auchan and Tesco. Detract the large orders.Avoid doing more than 30% to 40% of the total business withone customer.

Under all the pressures mentioned below， Langsha Socks，the largest socks producer of China has decided to stop thecooperation with Wal-Mart.

\"Wal-Mart can't do business in China with that price.\"So says the International Trade manager Cap Guoshun ofLangsha Group. Gema Company， who produces bags andhandbags， decided not to join the supply chain of Wal-Martafter a thorough consideration of potential risk. According toGema， the big order also brings in big risk， which overtakesthe limit of the company. According to General Manager LvQiang， Gema Ltd exports more than 100 million dollars everyyear， and not even one penny comes from Wal-Mart. He triedto find more chances for sales， 50% of which is realized byselling to sales agencies.

Anyway， the sales is growing annually in Wal-Mart. Aslong as China keeps the position of world factory， Wal-Martcan't ignore the Chinese suppliers. Meanwhile， finding moretunnels of distribution would not only avoid risk， but also bringmore benefit for the suppliers.