The Wal-Mart Way

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Duke University's Gary Gereffi says Wal-Mart wasn'the first American company to head to China in search of low cost goods, but it has been the most aggressive. "Wal-Mart was one of the key forces that propelled global outsourcing, off-shoring of U.S. jobs, precisely because it controls so much of the purchasing power of the U.S. economy."

Today, Nichol says he's got to move some production to China to stay competitive. That's bad news for his 1,500 U.S. employees. "It certainly says there will be a lot fewer people in U.S. manufacturing, half or more, that won't have a place in the world of the future"

Ray Bracy, Wal-Mart's vice-president of
international corporate affairs

"The sad truth is," says Ray Bracy, Wal-Mart's vice-president of international corporate affairs, "because of perhaps the pressure on price, and because the pressure of costs on the other side, that it's difficult to make ends meet, if you're a business, by staying here."

Today, if Wal-Mart were a country, it would be one of China's top ten trading partners. The company acknowledges it imports $15 billion in goods from China each year. Bracy concedes the figure could be much higher, and will keep on growing.

And you can see how Wal-Mart's trading relationship with China is transforming America at the port of Long Beach in California.

Five thousand ships arrive in the port of Long Beach every year. Officials here estimate 80 percent carry Chinese products.

Yvonne Smith, the director of communications for the port of Long Beach

"Thirty-six billion comes through Long Beach from China alone. Consumer products," says Yvonne Smith, the director of communications for the port of Long Beach.

What is the U.S. shipping back?

"We're shipping out about three billion worth of raw materials. We export cotton, we bring in clothing. We export hides, we bring in shoes. We export scrap metal, we bring back machinery."

Much like a third-world country might.

Smith agreed. "We're exporting waste paper, we bring back cardboard boxes with products inside them. Wal-Mart is our number one customer."

And as more and more low-cost Chinese products flow in to fill the shelves at Wal-Mart, more and more American manufacturing jobs flow overseas.

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