The WSJ on 14 October (link below) has an interesting article on China forcing a foreign corporation to kowtow after what seems to be an exaggerated transgression. The hapless business newbie? Wal-Mart.

The short of it is that after a Chongqing Wal-Mart mistakenly labeled non-organic pork as organic – which commands a higher price – the corporation was accused of price gouging by authorities, and all 13 Chongqing Wal-Marts were shut and several employees were arrested in response. The WSJ best describes Wal-Mart’s reply:

“So Wal-Mart dropped to its knees.

The company apologized, issued a statement declaring ‘the rights of consumers were infringed,’ and said it accepted the 15-day forced closure of its stores as an opportunity ‘to focus on implementing corrective actions.'”

Whatever your thoughts are toward Wal-Mart and other MNCs, China’s actions with regard to this case are interesting. As the rest of the WSJ article notes, this incident highlights ongoing problems that foreign companies have in doing business in the Middle Kingdom, with discriminate red tape (pun intended) and harassment all too regular.

There must come a price point where intellectual property theft and business troubles are no longer worth access to Chinese consumers, at which point companies will exit and take their innovation with them. What good is a kingdom then, with no one to kowtow?

http://online.wsj.com/article/SB10001424052970204774604576629200721570470.html