Wal-Mart, the world's largest retailer, yesterday launched a job optimization and regrouping program to reduce labor costs in China.
Under the program, the company plans to relocate some of the mid-management staff at its stores to similar posts in the new stores that are being opened in China.
The company intends to start this by shifting five to six mid-management posts from each of its present stores, said Leally Huang, public relations manager, Wal-Mart China.
Wal-Mart had 144 stores across China by the end of 2008, and plans to open 23 new stores by the end of the first-quarter this year.
"Those who are unsatisfied with the program and want to leave would be given adequate compensation, but we will try and see if we can retain them," said Huang.
The company's decision come close on the heels of a report in National Business Daily that Wal-Mart was implementing a lay-off program in China, its largest since entry in 1996.
Around 10,000 staff including 2,500-odd mid-management personnel and many others at different lower levels from Wal-Mart's 144 stores were reportedly demoted or asked to leave with compensation.
Huang, however, has denied the report. "The program is not about job cuts. It is a corporate interior personnel reshuffle that has been necessitated due to the decline in our corporate business," she said.
Hurt by the economic slowdown especially in the US, Wal-Mart's global sales revenue dropped by 0.1 percent in the last five weeks of 2008, which according to the company, is far below its expectations.
The company, however, said markets like China, Brazil and Mexico are still showing robust growth.
Company executives maintained that they are still scouting for new opportunities outside of the US, especially in Asia-Pacific, with China figuring as one of the most prominent locations for growth.
Huang said Wal-Mart's China business grew in 2008, but refused to disclose details. "Wal-Mart's China expansion plan has not been deterred," she said.
In 2008, Wal-Mart opened 19 stores, compared to 30 in 2007.
It is reported that Wal-Mart's regrouping program has not gone down well with employees from the Guangdong and Hunan provinces turning to the local trade unions for protection.
"They are just special cases, and Wal-Mart will sort them out," Huang said.
Wu Ruiling, deputy secretary-general of China Chain Store & Franchise Association, said supermarkets are one of the few areas in the retailing sector that has not been negatively affected by the financial crisis.
France-based Carrefour said it will not cut jobs in China, while Wu-Mart, another leading player with 700 stores nationwide, said it plans to recruit around 3,000 to 4,000 this year.