Walmart = ?
| 21 October 2011
Last week, in the Chinese city of Chongqing, Walmart was accused of mislabeling pork as “organic.” Chongqing arrested two Walmart employees, detained 37 others, shut down all 13 Walmart stores in the city for 15 days and fined Walmart 3.65 million yuan ($573,000) — five times the 730,000 yuan that the company’s stores made from selling the meat over 20 months. All of these penalties will cost Walmart an estimated $15.7 million.
No one can disagree with the fact that these penalties against Walmart are quite severe. But why? An exploration into the possible reasons for these extreme charges highlights the unintended consequences of being an iconic brand.
Possible reason #1: Walmart = visible
Walmart is a highly public and highly visible entity — and as such, any legal actions taken against the company will attract a high degree of attention and publicity. (It’s the same idea behind public executions.) Chongqing’s director of law enforcement himself acknowledged that the authorities targeted a visible company for the purposes of setting an example when he stated: “anyone who breaks the law… will be punished. It’s a warning to them.”
Possible reason #2: Walmart = foreign
The selective enforcement against Walmart is one of many recent examples of unfair treatment experienced by non-native business in China. In May, China fined Unilever 2 million yuan for telling the media about plans to raise prices. In September, the European Union Chamber of Commerce issued a report accusing China of maintaining rules that “unambiguously discriminate against foreign companies.”
Possible reason #3: Walmart = American
The extreme penalty against the Arkansas-based company may also have occurred as a public criticism of recent US political activity. Local Chinese resident Ms. You explained: “the crackdown on Wal-Mart might have something to do with the United States selling weapons to Taiwan. Maybe Bo Xilai [the Secretary of the Chinese Communist Party in Chongqing] wanted to teach American companies a lesson, which would also gain himself some merits for the upcoming Party’s National Congress, where he could travel up the political ladder.”
Possible reason #4: Walmart = consumerism
Communist countries have long histories of defining consumerism as a threat to their social and moral fabric. China is not unique. The relatively recent success of China’s economy has given rise to a more affluent middle class with higher disposable incomes, which has transformed the country into the world’s fastest-growing consumer market. This market has attracted major retailers like Walmart.
All of these explanations reveal that the severity of the punishment was symbolic: Walmart was targeted because of what it represents — not what it is, not what it does, but the symbolic associations of the brand itself.
Brand = sign
While the actual intentions of the Walmart China penalties will never be known, it is important to recognize that brands — as signs — are highly malleable objects. And their connotations and denotations are directly and indirectly open to constant re-definition. Such brand associations can be powerfully positive (Nike = Jordan, Nike = cool), or painfully negative (Nike = Tiger, Nike = sweatshop). Either way, brands continually remain vulnerable to the possibilities of being re-cast in unintended ways.
For Walmart, the challenge is now how to re-define any negative symbolic associations among consumers that are the result of this incident (Walmart = liar).