Thursday, February 14, 2013

Walmart Mislabels Products In China

Based on a paper by Breana Giordano (2008)
April 25th, 2012

Summary by Matt O'Connor

For years now, Walmart has seen nothing but revenue rolling in from sales in 15 different countries. However, what they have also seen is consequence. Asking any average person to name a corporation who has a bad reputation, Walmart will most likely be named. They have been scolded for their low wages, unpleasant treatment of employees, and controversial pricing strategies. From 2008 to 2010, they added another unethical strategy to their list. Walmart generated around 730,000 yuan ($117,161) in income illegally in China. They did this by labeling their regular pork products as "organic", so that they could raise prices and make more gains. On top of this, they sold duck meat that had passed its "sell by" date. These tactics were being used due to a slight lack of revenue in China, whose people were relatively new to Walmart stores and their products. While clearly no one was injured from eating non-organic pork, there are many people who eat only organic foods, and could have been mentally damaged from finding out the truth. As for the duck meat, no cases were found of sickness, but again, eating expired meats is extremely dangerous and could cause serious illness. No matter what one's opinion consists of, it is clear that Walmart did not have their customers' best interest as a first priority. Economic theories all have different viewpoints on ethical behavior, but customer satisfaction may not even be one of their criteria.

     When looking at this case through an ethical analysis, one will find that the only theory that supports Walmart in some ways is Individualism. The other three theories; Kantian, Utilitarian, and Virtue will all hold that Walmart is unethical. According to the theory of Individualism, Walmart is behaving ethically in most aspects. Managers who authorized this were only acting as an employee of the owners, whose goal was to make as much profit as possible. Individualism holds that the only duty that the company has is to its owners and therefor itself, and its stockholders.One reason they are slightly unethical under this theory is because they caused harm to their reputation in China, and therefor probably lost some profit in the next year. Also, Walmart went against this theory by overlooking the law. This makes their profits seem unethical, so an individualist might say that they were not ethical because of this. However, these are just a couple possible ways that an individualist would consider them unethical.  Making money in whatever way possible in this case meant lying to customers and giving them false information. They knew they had an opportunity to gain more profit, and they seized it at the expense of buyers. Angering? Maybe, but unethical to an individualist? No. When looking through the eyes of a second theory, utilitarianism, we will find that Walmart's behavior was wrong. This theory assumes that happiness is the most important factor and that in any situation, maximizing happiness for all stakeholders is the main goal for an organization. Under this theory, Walmart is one hundred percent "unethical" because they created a win-lose outcome, where they were the winners, and the customers lose. They put their customers' health at risk as well by selling them food that could have caused severe sickness. This shows that they had no respect or care for people outside the company. They made no attempt to maximize overall happiness and rather only cared about their own. It is even possible to say that they might have made themselves unhappy as well, dealing with the fact that they essentially "cheated" and took extra money from innocent people. That may be a stretch in terms of the theory, but it is definitely realistic. Kantian theory would also suggest that Walmart is unethical, but under different rational. A Kantian would say that Walmart did not give their customers a fair chance at making a rational decision, because they held information from them and even gave them false claims in order to obtain their money. This hindered them from making the choice not to buy the products even thought they most likely would not have if they had all the information. Also, Kantian theory would suggest that Walmart should not have considered themselves exempt from the rules or laws, knowing full well what their illegal actions were. In no way were they acting from motivation of good will either, in fact it is just the opposite. They disrespected their customers completely and showed no remorse for it.

The Virtue Theory would hold these beliefs as well. Courage can be interpreted in many ways, but Walmart did not have to pay or even apologize to the people they wronged, and they did not. Having the courage to do that would have been a decent step in the right direction. It is indisputable that they acted with no honesty, by simply lying to others about their products with the goal of making some money. Walmart had no temperance. They had completely unreasonable desires hence the fact that they had to lie and take money from customers just to obtain profit and happiness. In terms of justice, again, there is none. They did not have any fair practices in this scenario, because taking advantage of innocent people surely is not fair. This part of the theory also includes "quality products" which there were none of. The pork meat was labeled as better quality than it really was and the expired duck meat is certainly not quality.

These facts and analyses are based on an original paper by Breana Giordano (2012)

Lee, Melanie. "Walmart's Pork Scandal Highlights Struggles in China." Reuters.
       Thomson Reuters, 14 Oct. 2011. Web. 25 Apr. 2012.

"Money & Company." Walmart Executives Resign in China Labeling Scandal. 
        Web. 25 April.2012
"China- Walmart in Organic Pork Scandal." Meat Trade News Daily. Web. 25 Apr. 2012

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