January 24, 2014 / 12:20 PM / 6 years ago

Chinese state TV criticizes Wal-Mart's quality control

HONG KONG (Reuters) - A state-owned Chinese TV station which has run a string of stories criticizing foreign firms has accused U.S. retailer Wal-Mart (WMT.N) of circumventing its quality control process and fast-tracking some products with higher profit margins.

The Walmart logo is pictured at its store in the Porter Ranch section of Los Angeles November 26, 2013. REUTERS/Kevork Djansezian

The report by China Central Television (CCTV) was based on an interview with an anonymous former Wal-Mart employee and cited more than 200 documents dating from 2006 that referenced a “special approval process” and mentioned alcohol suppliers that did not have production permits.

Wal-Mart, the world’s No. 1 retailer, said it keeps a close watch over its supply chain and only uses its special approvals process in specific circumstances, such as when a supplier changes the size of a product or switches distribution agents.

“Our special approval process is used to accelerate listing items from suppliers we already do business with. The process requires three levels of management approval on an item by item, supplier by supplier basis. This ensures that we do not sell fake or inferior products nor we compromise the welfare or safety of our customers,” Wal-Mart said in a statement.

“In the past year we have stopped selling hundreds of items that we believe fall short of the quality expectation our customers deserve,” the company added.

CCTV 13, the broadcaster’s Chinese language news channel, functions both as a mouthpiece for the ruling Communist Party and a platform for news reports.

Wal-Mart is the latest in a series of foreign companies it has taken to task on issues ranging from pricing to poor quality products and shoddy customer service.

Companies it has criticized include coffee chain Starbucks (SBUX.O), consumer electronics groups Apple (AAPL.O) and Samsung

(005930.KS), the KFC restaurants of Yum Brands Inc (YUM.N), drugmaker GlaxoSmithKline (GSK.L) and carmakers Audi (VOWG_p.DE), Subaru (7270.T), and Jaguar Land Rover (TAMO.NS).

However, its reports have had mixed results.

While Apple apologized to Chinese customers for poor communication over its warranty policy and changed some of the terms following a critical CCTV broadcast, the station’s report on Starbucks was mocked by Chinese internet users and criticized by economic experts.

Wal-Mart operates more than 400 stores and warehouses in China and competes with market leaders Sun Art Retail Group Ltd (6808.HK) and China Resources Enterprise Ltd (0291.HK), which in August teamed up with Britain’s Tesco (TSCO.L).

This is not the first time Wal-Mart has had trouble with Chinese authorities. In 2011, China fined Wal-Mart, along with France’s Carrefour (CARR.PA), a combined 9.5 million yuan ($1.6 million) for manipulating product prices.

Wal-Mart was also fined that year in China for selling duck meat past its expiry date.

Earlier this year, the U.S. group apologized after a Chinese supplier of donkey meat snacks was found to have mixed fox meat into the product.

Reporting by Alice Woodhouse and Clare Baldwin; Additional reporting by Matthew Miller; Editing by Mark Potter

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