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UNCLAS SECTION 01 OF 02 GUANGZHOU 030782 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
BEIJING FOR CG 
STATE FOR CA/VO, EB, AND EAP/CM 
USDOC FOR 4420/ITA/MAC/MCQUEEN 
USPACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: CVIS ECON ETRD CH
SUBJECT: Behind Everyday Low Prices - Consular Outreach to Wal-Mart 
in Shenzhen. Part 1 of 3. 
 
REF: A) GUANGZHOU 031368 B) GUANGZHOU 018161 C) SHANGHAI 00005609 
 
THIS DOCUMENT IS SENSITIVE BUT UNCLASSIFIED.  IT SHOULD NOT BE 
DISSEMINATED OUTSIDE OF U.S. GOVERNMENT CHANNELS OR IN ANY PUBLIC 
FORUM WITHOUT THE WRITTE CONCURRENCE OF THE ORIGINATOR.  IT SHOULD 
NOT BE POSTED ON THE INTERNET. 
 
¶1. (SBU) SUMMARY: Employees at Wal-Mart Global Procurement in 
Shenzhen China told Conoffs during an orientation trip that the 
company is pleased with how staff are treated when they apply for 
visas and that that they are interested in working with the 
consulate to facilitate and improve the working relationship.  The 
procurement office said that Wal-Mart is committed to maintaining 
high ethical standards in its dealings with suppliers.  They also 
told Conoffs that 73% of Wal-Mart's global imports (not just those 
going to the U.S.) originate in China and of that amount, 73% are 
from Guangdong Province.  This is the first of three cables about 
the Consular outreach to businesses in Shenzhen. END SUMMARY 
 
Purpose - Corporate Outreach and Officer Education 
--------------------------------------------- ----- 
 
¶2. (U) On August 25, 12 Conoffs and two Locally-Employed Staff (LES) 
traveled to Shenzhen to meet with three large companies which have 
large numbers of employees who regularly travel to the United 
States. This trip continues a tradition of outreach trips organized 
by entry-level officers (ELOs) in consular positions; the purpose of 
the trips is to better understand the South China business 
environment, major corporations' operations in the region and 
corporate needs for travel to the United States.  The companies 
selected for this trip were: FoxConn, a Taiwan-owned contract 
manufacturer for many major electronics and computer companies, and 
its Mainland-based operation Hongfujin Precision Industries; 
Shenzhen Mindray, a Chinese medical technologies company; and 
Wal-Mart Global Procurement, the division of U.S. retail giant 
Wal-Mart. The companies were selected to give officers a perspective 
on three different industries: electronics manufacturing, medical 
devices, and retail procurement.  In addition, the companies chosen 
companies have a large and growing number of visa applicants in 
Guangzhou. The trip was timed to include new officers arriving 
during the summer transfer season. 
 
Wal-Mart Global Procurement - Stocking Shelves for America 
--------------------------------------------- ---------- 
 
¶3. (U) Conoffs are well familiar with Wal-Mart Global Procurement 
(GP), the subsidiary of Wal-Mart responsible for all direct 
importing activities not just to the United States, but to all 
Wal-Mart retail outlets outside of China.  Upon leaving the building 
lobby and entering the second floor offices of GP, Conoffs seemed to 
have entered a Wal-Mart retail store in any U.S. town.  Color 
schemes, employee work vests, and signage - including quotes from 
deceased founder Sam Walton - were strikingly similar. 
 
¶4. (SBU) GP began operations in 2002, and works in close conjunction 
with corporate buyers in Bentonville, Arkansas.  Buyers decide what 
goes on the shelf, but GP merchandisers find suppliers, execute 
orders, ensure quality and look for the best possible value.  In 
addition, GP has an ethics and auditing unit that performs factory 
inspections to ensure that factories do not employ child labor or 
violate local employment laws.  Factories are judged on a traffic 
light scale of green, yellow, orange, and red with a red violation 
or repeated orange violations resulting in Wal-Mart ceasing use of 
the factory as a supplier.  A growing number of these audit 
inspections are unannounced.  GP has a strict policy of not allowing 
any gifts or meals whatsoever to be given to its employees. 
 
¶5. (SBU) GP has 31 offices world-wide with 1693 employees; Shenzhen 
is its headquarters.  This is largely because 73% of Wal-Mart's 
imports come from China while an additional 15% come from Southeast 
Asia.  Furthermore, among imports from China, 73% come from 
Guangdong province (where Shenzhen is located).  The high figure may 
at first sight seem surprising given that Guangdong province 
accounted for just 31% of China's exports last year, however, 
Guangdong's status as the "manufacturing floor of the world" and 
producer of what consumers want makes the high percentage 
understandable.  Mr. Cui said that the number of suppliers from the 
interior and north of China are increasing.  GP's purchases of 
material from the coastal provinces of Fujian, Zhejiang, Jiangsu, 
Shandong, Tianjin, and Liaoning, as well as from companies located 
in the interior of China have increased at more than 20% per year, 
leading to GP having to shift staff, or hire new staff at satellite 
 
GUANGZHOU 00030782  002 OF 002 
 
 
offices to perform quality assurance and auditing work on these new 
suppliers. 
 
¶6. (SBU) GP Director of Administration Kenny Chen and Corporate 
Travel Supervisor Wendy Zhang told Conoffs that GP merchandising 
employees are responsible for sourcing suppliers and order 
execution.  Most have spent at least two-to-three years as an 
assistant merchandiser before promotion, are college educated, and 
speak English.  Merchandisers travel to the United States primarily 
to meet with buyers and gain a better understanding of the U.S. 
retail market.  While in the United States, the merchandisers also 
visit Wal-Mart and other retailers' stores to do comparison pricing. 
 Most merchandisers will travel to the United States several times 
each year. Mr. Chen said that when Wal-Mart suppliers need to travel 
to the United States, Wal-Mart headquarters in Bentonville arranges 
for their invitation letters and their travel.  Wal-Mart China, a 
separate division that handles retailing in China, arranges its own 
employees' travel needs.  GP could not comment on the type and 
numbers of employees from Wal-Mart China traveling to the United 
States who might require visas.  Wal-Mart GP recommended that 
Conoffs also meet with Wal-Mart China. 
 
¶7.  (SBU) GP was not prepared to discuss salaries or retention of 
employees in detail but did say the company aims to pay a 
competitive salary based on local corporate salary surveys in all of 
its positions.  GP also admitted that while its approach was to hire 
from universities and train internally, its employees at the 
merchandiser level are highly sought after by other organizations. 
To help with retention and inculcate the corporate culture into new 
employees, GP said it selects a group of high-performing assistant 
merchandisers to attend the Wal-Mart shareholder meeting each year 
in Bentonville. 
 
¶8.  (SBU) Wal-Mart Global Procurement is a member of the American 
Chamber of Commerce in Guangdong and uses its Visa Appointment 
Program for all of its employees who travel to the United States. 
GP is pleased with the way the program is working and with the visa 
issuance rate for its employees in Guangdong.  GP did state that its 
employees at the company's smaller satellite offices outside of 
Guangzhou's consular district have had much less success obtaining 
visas to the United States. 
 
Comment - Better Understanding for All 
--------------------------------------- 
 
¶9. (SBU) Three factors contribute to the successful relationship 
between GP and the Congen staff.  The first is the familiarity that 
all visa officers have with Wal-Mart and the retail business in 
general.  The second is that Wal-Mart Global Procurement is one of 
the largest U.S. companies in Guangzhou's consular district sending 
many employees each year to apply for non-immigrant visas causing 
further familiarity with the company.  Finally, Wal-Mart Global 
Procurement is a member of the American Chamber of Commerce in 
Guangdong (AmCham) Visa Appointment Program.  The program requires 
additional documentation such as an employment verification letter 
from a designated signatory with the applicant's company and an 
invitation letter on corporate letterhead.  Additionally, these 
applications are screened before the interview by both the AmCham 
and Consulate staff.  Applicants who use the program must also 
report their return to the AmCham once their trip is completed. As 
such, Wal-Mart Global Procurement employees who have been issued 
visas through this program in the past have all returned on-time, 
giving the line officer increased confidence in future GP 
applicants' stated employment, purpose of travel, and likely return. 
 
 
¶10. (SBU) To facilitate travel for U.S. companies with headquarters 
in one consular district and small offices in another district 
within the People's Republic of China, Beijing, Shanghai, and 
Guangzhou have recently expanded their respective AmCham visa 
programs.  Under the new reciprocity agreement, member companies in 
any of the three AmCham visa programs can refer their 
out-of-district employees to the AmCham in the employee's resident 
consular district (REF C).  Post has discussed with consulate 
colleagues difficulties Wal-Mart Global Procurement has had with 
employee visa applications outside of Guangzhou; Wal-Mart Global 
Procurement employees in the company's satellite office in Shanghai 
may be among the first beneficiaries of this new AmCham reciprocity 
agreement in Guangdong. 
 
GOLDBERG