Chinese Regulator Flags a $50,000 Fine Against Walmart

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Local officials uncovered a 2021 breach by a US retailer, the latest in a series of criticisms

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Large corporations in China are often fined small fines for violations, but those fines are often not publicly disclosed by regulators.

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The Biden administration signed a law in December banning most US imports from the Chinese territory of Xinjiang, where the Chinese government has campaigned for forced assimilation against religious minorities. The US also announced a diplomatic boycott of the Olympic Games to be held in Beijing next month.

Walmart has not discussed various actions by Chinese officials and a spokesperson declined to comment on Friday. The company has been operating in China for decades, importing Chinese-made goods into the US and operating more than 400 stores in the country.

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This week, Walmart was involved in a dozen cases that regulators in the southern province of Guangdong introduced this week in a lecture to boost their law-enforcement work on China’s “unfair anti-competition law.”

The Guangdong Administration for Market Regulation said on Wednesday that it fined Walmart 300,000 yuan, the equivalent of $47,200, after it determined that the Sam’s Club app automatically assigned five-star reviews to products. Users had not rated the products themselves yet. It was not specified when Walmart was fined.

The regulator said on its website that the practice, which took place from October 2020 to May 2021, amounted to misleading consumers and false product promotion. A person familiar with the situation said the fine was issued in July 2021 and was paid by Walmart the following month.

Meanwhile, on Thursday, a spokesman for the government of the Xinjiang region sent a warning message to foreign companies.

“We advise these companies not to underestimate the patriotic enthusiasm of Chinese consumers, not to underestimate the ability of Chinese consumers to defend their legitimate rights and interests in accordance with the law, and the potential consequences of covert political manipulation.” Don’t underestimate me,” Xu said. Guijiang, a spokesman, said at a news conference.

Walmart faced a backlash on Chinese social media in recent weeks after some Internet users shared comments purported to show that the company had stopped stocking products in its Chinese stores off Xinjiang.

Xinjiang has become a source of geopolitical tension. Researchers say officials in the Western Region have detained a million members of ethnic minorities in a network of internment camps as part of the government’s ethnic assimilation campaign, which they say is mass surveillance, Forced labor and stringent birth control are also included. The US government, along with some lawmakers in other Western countries, have said these policies are a form of genocide.

Beijing has dismissed the allegation of genocide as a concoction, describing its operation in Xinjiang as an innovative attempt to counter religious extremism and terrorism.

China is Walmart’s second largest international market by retail square footage after Mexico, while the company is most dependent on its US business for revenue and profit. International sales account for about 22% of Walmart’s $559 billion in global revenue. Walmart doesn’t disclose revenue by country.

In 2016, Walmart sold its original Yihadian e-commerce site to JD.com. Inc.

Walmart has recently been focusing on expanding the popular Sam’s Club business, as well as building out e-commerce services for the membership warehouse chain.

Write Clarence Leong at [email protected]

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