Wal-Mart Gets Fined In China And Target Gets Away With It Here?

For any one that doesn’t think we have a “pro-business” media and culture in the United States, I would like to offer a couple of thoughts on the latest incident in China involving Wal-Mart Stores Inc. (NYSE:WMT).

For those of you who aren’t quite sure what is going on, because “occupy Wall Street” has taken over media attention, let me catch you up.  Wal-Mart was selling standard every day pork as “organic” in China.  As we all know, organic foods generally cost more.  Simply put, Wal-Mart was misleading consumers, got caught and paid a hefty price.  Two employees were arrested, 13 stores were ordered closed for two weeks and a fine of $423,000 was issued.

Every paper and online article I could find had called the fines everything from “ridiculous” to “unusually severe”.  The USA Today quoted Corbett Wall, a retail expert at +CW associates as saying, “If I were a foreign company, I’d be pretty scared right now.

Is this really “severe punishment” or a government office in China using a swift kick to let Wal-Mart executives know that false advertising isn’t tolerated?  The papers have tried to lump this incident in with several other totally unrelated fines by different offices of the Chinese government in order to make it look like an anti-US business stance by the Chinese.

The accusation is that Wal-Mart was cheating consumers to increase it’s profits.  If that is true, then is this really “severe”?  In the United States we have the Tea Party complaining about big government bailing out big companies at our expense, and occupy Wall Street disrupting everything they can.  With all of this, nothing is really changing.  The US government and media continue to coddle their one golden goose, US business.

Watching “Occupy Wall Street” on TV, you have to wonder what they think while Tweeting away on Blackberrys and iPhones and Facetiming on iPads while living in tents and sleeping bags more likely from Wall Street Darling Wal-Mart than from REI.

In the US, it used to be easy to sue big companies that falsely advertised.  Now it is a lot harder.  Do you think the big box stores in the US are any more honest than in China?  Let’s look at just a couple recent big box store activities.  This year in California, every home is required to have a Carbon Monoxide Detector, or so the Home Depot (NYSE: HD) would like you to believe.  Maybe because they lobbied heavily for a law that “might save” up to 40 lives per year in California, never mind that the detectors can be 3 times more expensive and last half as long as a standard smoke detector or that only 46% of the deaths occurred in a residential structure.  In some cases CO poisoning was listed as the cause of death after a fire.  Is this Home Depot and the State of California looking out for the 99% or looking out for Home Depot?

Recently we found another example at Target Stores Inc. (NYSE:TGT) that caught our attention.  This case has been going on for some time and has almost no attention at all online and there isn’t much a US consumer can do.

Target is currently selling a “Nolan Leather Club Chair” for $199.  For a leather chair this sounds like a good price.  There are several places in the description and online calling it “bonded leather” which is a mix of leather and vinyl or plastic.  The big cardboard box the chair comes in only says “Leather Chair”.  If you sit in one in the store, they have a very leather like feel, probably from so many people stretching the vinyl and the cooler temperatures of the stores preventing you from sticking.

If you happen to buy a chair and flip it over, there is a label that says “chair covered in simulated leather”.  It turns out this isn’t leather or even bonded leather, it is just “simulated leather.”  What would the tea party say to this?  Occupy Wall Street?

When asked, a Southern California Target manager said “We just post the signs that corporate sends us, if you would like to return the chairs, you can.”

A little legal research found that unless I have received “actual financial damages” from the misleading or false advertising, there isn’t anything you can do but return the chairs.  When you feel cheated by a big box store, the fines levied on Wal-Mart in China might not sound too bad.  The irony is the chairs at Target in the “Leather Chair” labeled box came from China.

Nolan "Bonded Leather" Chair Made with "Simulated Leather"
Is "Simulated Leather" really Leather?

So what gives? Why are we supposed to “occupy Wall Street” and ignore getting ripped off at home? Are we as US consumers so self-centered that we wouldn’t want to be inconvenienced if our local box store was shut down because they were misleading us? So maybe China and Wall Street are right and the 99% of us here in the US are just suckers.

About the author

Scott Neal is an independent business analyst and writes for Beach Street News and other online and offline publications.

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