It's reported that the Center has altogether removed some 250 staff, about 110 of which were from China's Shanghai, Shenzhen, Putian, and Dongwan branches. Elsewhere, purchasing departments in Singapore, Philippines, Sri Lanka, and Turkey were shut down, bringing the unemployment of over 100 people.

The Center was established in February 2002, with its head office in Shenzhen. It has a staff of over 1,600, among which 1,000 are Chinese.

A Response to the New Labor Law?

The timing of the act has provoked suspicion that it is linked to the new Labor Law, which will take effect on the first day of 2008. To dismiss the same number of employees after the new law is put into force will demand stricter procedures and more compensation.

Dong denied the above interpretation, saying that the initial intention of the act was to improve work efficiency rather than to react to the new law.

Other voices say that another reason for the reduction lies in Wal-Mart's shrinking purchasing quantities in China. Statistics from Ministry of Commerce show a mere 30.5 billion yuan of the company's outlay on purchasing in China for the first half of 2007, contrasting with a 70.3 billion yuan outlay for the prior year.

However, according to Dong, the figure remains around 9 billion dollars in the past several years, and the company has never intended to restrain purchasing in China.

He says that before taking action, the company has consulted its attorneys to assure it performs within the law.

After being laid off, Li and Zhao, with some other colleagues, attempted to resolve its dispute with Wal-Mart via Shanghai Foreign Agency Service Department, but the mediation was officially declined by the company on November 6th. The argument then went to arbitration by the municipal labor department and the Federation of Trade Union. "If we are not content with the result after arbitration, we'll consider suing Wal-Mart," says Zhao.

Seeking a Balance

The scandal once again exposed Wal-Mart's precarious position in Chin over the past several years, that is, its challenge to strike a balance between its own principles and the reality of doing business in China, along with how to meet the same requirements it has imposed on its suppliers.