The Wal-Mart / China "Joint Venture"
Five Rivers Electronics is the very last American-owned TV manufacturer in this country. It employs 940 workers in its Greenville Tennessee plant.
An employee assembles a television at Five Rivers Electronics.
"Well, it's a constant struggle to survive, I mean it's a very competitive market," says Thomas Hopson, Five Rivers' president.
The battle for the small TV set market was lost to foreign imports years ago, so Hopson steered his company toward high-end, big-screen sets. And by focusing on quality, he could compete.
Then in 2001, Hopson says, the high-end television market came under attack from a flood of Chinese imports.
"They just grew at an amazing rate," says Hopson. "They weren't here. … All of a sudden, they're shipping millions and millions of televisions, from China."
The Chinese sets were selling for prices Five Rivers couldn't hope to match. In three short years, Chinese TV makers grabbed a third of Hopson's market.
Thomas Hopson, president of Five Rivers Electronics
"If we can't compete on a fair level playing field," says Hopson, "then we go out of business like anyone else."
But Hopson was convinced he was up against more than just free trade. His company filed a trade complaint with the International Trade Commission charging the that Chinese companies were "dumping" high-end TVs onto the American market.
"It's a rigged system," says David Harquist, the company's trade attorney. "The Chinese system has built-in advantages that no one else in the world has. … The government provides subsidies to Chinese producers at preferential interest rates that may not even have to be repaid."
Chinese TV makers denied the dumping charges. Harquist and Hopson were prepared to take on the Chinese, but were surprised by their other opposition.
"Well, Wal-Mart chose the side of the Chinese," says Hopson, "and basically, Wal-Mart spent a lot of time and effort at the International Trade Commission hearings testifying against us and our case. … Why would Wal-Mart testify to support jobs in China instead of American jobs, unless there was some benefit to them?"
Hopson was stunned.
The ITC ruled against Wal-Mart and the Chinese. Wal-Mart would not discuss this case, but some of Wal-Mart's largest television suppliers are Chinese companies.
"Wal-Mart and China are a joint venture," says Gary Gereffi, a Duke University professor who has studied big retail chains like Wal-Mart for years. "And both are determined to dominate the U.S. economy as much as they can in a wide range of industries."
China needs Wal-Mart to crack open the American consumer market, and Wal-Mart relies on Chinese factories to supply it with goods at unbeatable low prices.
Gereffi says if Wal-Mart were a country, it would be one of China's top-ten trading partners, buying more than $15 billion in goods last year. Wal-Mart executives say that number is only going to get bigger.
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