In terms of retail sales, Walmart is one of the world’s largest companies. The company has expanded into foreign territories after its success in the U.S. market. Intending to expand its influence, Walmart entered the Chinese market in 1996. Walmart’s existing human resource management practices did not meet the needs of the regional business community. Within the past 20 years, Walmart has gone through multiple employee management models to resolve the tension between then-current employee management models and actual retailing performance in China.
Walmart’s then-current HR practices did not promote business expansion in the Asian region. According to Xie and Cooke (2018), Walmart’s HR policies in 1996 “were underpinned by its corporate core values and were marked by these characteristics: treating employees as its business partners, competitive salary and welfare benefits, emphasis on employee training and development to help employees to grow, and fairness and transparency in promotion based on merits” (p. 10). Although the employees were generally satisfied with working conditions and career opportunities, the business’s underperformance invited soon-to-come radical changes in the company’s strategic course.
Yaochang Chen’s appointment as the new chief executive officer of Walmart China had major implications for the company’s approach to HR. The primary stakeholders involved in this decision were Walmart’s top managers both in China and at home. According to Xie and Cooke (2018), “Walmart’s corporate core values were largely abandoned in favor of locally informed practices, including deploying a two-tier workforce with the longer-serving workforce on permanent employment contracts and the new workforce on temporary contracts with different terms of employment and conditions” (p. 10). Compared with the local average and minimum wage threshold, the pay level decreased relative to the local average and minimum wage. In addition to the substantial decline in employer contributions to social security premiums, the number of formal employees and the number of contributions made by formal employees have been drastically reduced (Xie & Cooke, 2018). By the 2000s, Walmart employees in Shenzhen had fallen from mid-income earners to low-income earners. The corporation has then faced constant allegations of unethical HR practices and has worked hard to amend mistakes made.
In conclusion, Walmart’s expansion in the Chinese market has been challenging for both employers and employees. To increase the performance of the business, Walmart’s executives implemented multiple questionable HR practices. This resulted in declining employee social security and a subsequent public outlash. The corporation has since applied considerable effort to rectify HR-related issues and amend its public image.
Reference
Xie, Y., & Cooke, F. L. (2018). Quality and cost? The evolution of Walmart’s business strategy and human resource policies and practices in China and their impact (1996–2017). Human Resource Management, 58(5), 521-541.