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Wal-Mart Toughens Standards For Apparel Suppliers
From Marketwise
By Dave Vagnoni
December 2008

Wal-Mart has put apparel suppliers on notice overseas, demanding tougher and more detailed quality-control standards. While the retail leader has not announced specifics, the new rules follow a lengthy series of product scares in China. "We expect you to ask the tough questions, to give us the answers and, if there’s a problem, to own the solution," says Wal-Mart executive Mike Duke, directing his comments toward suppliers.

Wal-Mart will ask suppliers to name the location of every factory they use to make the products that Wal-Mart later sells. There is mixed opinion among U.S. suppliers as to whether the standards will eventually be applied here. There is concern, though, that Wal-Mart’s stance could soon affect pricing. "The outcome of this can’t be price neutral," says Girisha Chandraraj, vice president of marketing for Broder Bros Co. (asi/42090). "I think it’s a good thing that Wal-Mart is taking this action, but we can expect higher prices from this eventually."

Mike Rhodes, president of Bodek and Rhodes (asi/40788), has a different view, though. "I do not think this will impact the apparel market in any significant way," he says. "China is a very small part of the apparel market for our industry. I believe it will have a very minimal effect on our industry, regardless of the country where the product is being made."

Besides apparel, many other items produced for the ad specialty industry are manufactured in China. It is still unclear how and when non-apparel suppliers will be affected by Wal-Mart’s mandates. China has become increasingly pressed by international agencies in recent months, after several illnesses and injuries were caused by Chinese-made items. Toxic milk, tainted toothpaste and faulty cribs have been cited by government agencies.

The United Nations wants China to create a regulatory bureau to enforce more stringent product safety codes. Wal-Mart has not disclosed its enforcement timeline or the extent of its altered guidelines. – DV

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