Walmart's HR Strategy for the Chinese Market
This paper analyzes the human resources challenges Walmart faces in pursuing its growth strategy in China. It examines the recruiting difficulties caused by wage inflation and a shortage of qualified managerial talent, the potential role of expatriate managers, and the importance of structured training programs. The paper then evaluates three strategic alternatives — maintaining the existing joint venture, buying out the partner to gain full operational control, or modifying the current arrangement to improve HR oversight — before recommending a hybrid approach that keeps the joint venture intact while expanding Walmart's direct influence over hiring and management development in the Chinese market.
- Introduction: Walmart's strategic HR context in China
- Recruiting Challenges in China: Wage inflation and managerial talent shortage
- The Role of Expatriate Managers: Expat deployment to strengthen operations
- Training and Talent Development: Building an internal managerial pipeline
- Strategic Alternatives: Three options for restructuring China operations
- Recommendation: Hybrid partnership with stronger HR control
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What makes this paper effective
- The paper moves logically from problem identification (recruiting, expats, training) through a structured alternatives analysis before arriving at a clear recommendation — a professional consulting report format well suited to business case studies.
- It grounds each HR challenge in a specific market condition, such as the 4.2% unemployment rate driving wage inflation, which anchors abstract strategy claims in concrete evidence.
- The use of a real parallel case (Starbucks buying back its JV stores) strengthens the second alternative and demonstrates awareness of industry-level precedent.
Key academic technique demonstrated
The paper demonstrates structured alternatives analysis, a core technique in business strategy writing. Each alternative is presented with its rationale and its downside before the author converges on a recommendation. This prevents the recommendation from appearing arbitrary and shows the writer's ability to evaluate trade-offs systematically.
Structure breakdown
The paper opens with a brief framing of Walmart's strategic position in China, then dedicates a section each to recruiting, expatriate management, and training. A multi-alternative analysis section follows, covering the status quo, full buyout, and a modified partnership. The paper closes with a recommendation that synthesizes the prior analysis and addresses implementation logistics and cost justification. Total length is concise and appropriate for a graduate-level strategic HR memo.
Introduction
Walmart faces significant challenges in the Chinese retail market. There are many barriers to trade and issues that constrain the company from using tactics that proved successful in the United States. As a result, the company must balance adhering to the classic Walmart business model with adapting to the unique characteristics of the Chinese market. Faced with these strategic challenges, Walmart needs a human resources strategy that supports its ability to meet its strategic objectives in China.
Recruiting Challenges in China
The first issue is recruiting. Walmart aims to maintain a low-cost workforce, which implies low wages and flexibility on hours. In China, unemployment in 2005 stood at 4.2% and had frequently been lower in recent years, which puts upward pressure on wages (Trading Economics, 2015). While millions of potential workers are migrating from the agricultural sector — where wages are often barely above subsistence — wage inflation is especially strong in the wealthier areas where Walmart would want to situate its stores. This will pose a significant recruiting challenge for the company.
Furthermore, Walmart relies heavily on managerial talent for much of its success; it is a very well-run company. The problem is that, unlike American business schools, Chinese business schools do not produce a large volume of high-quality managers. Often, Chinese companies are forced to recruit managers from Taiwan or Hong Kong (Yang, 2015). This would be less of a concern if Walmart could simply send American managers overseas, but because the company is grappling with China-specific challenges, it needs managers who understand the local environment. The better Walmart is at recruiting, the lower its turnover will be and the more effectively it will be able to build institutional knowledge that blends Walmart's systems with the realities of doing business in the PRC (Sanford, 2005).
Recruiting such talent will be difficult, so the company may also wish to consider setting up training and education programs to develop its managerial talent in-house, blending the company's proprietary tactics with practical knowledge of the Chinese business environment. Whatever strategy it pursues, Walmart needs a strong managerial pipeline to support its growth ambitions in China, and these managers must be able to work effectively within that market.
The Role of Expatriate Managers
Walmart may be able to leverage some of its own personnel by deploying them to China. Where there are significant deviations from how Walmart would normally do business — such as with the handling of fresh fish — the company will need oversight from its head office. Furthermore, many of the problems the company has experienced to this point may well have been avoided if it had placed more of its own people in China rather than relying on the joint venture partner to supply managerial talent. There are inherent challenges in sending expatriates to a demanding market like China, but there is an extensive body of research on the personality traits and competencies of managers who are most likely to succeed in overseas assignments (Caliguri, 2000).
References
Caliguri, P. (2000). The big five personality characteristics as predictors of expatriates' desire to terminate the assignment and supervisor-rated performance. Personnel Psychology, 53(1), 67–88.
Sanford, J. (2005). Making cents out of the hiring process. HR Management. Retrieved March 24, 2015, from
Tang, Z. (2011). Starbucks buys back control of stores. China Daily. Retrieved March 24, 2015, from
Trading Economics. (2015). China unemployment rate. Trading Economics. Retrieved March 24, 2015, from http://www.tradingeconomics.com/china/unemployment-rate
Yang, D. (2015). Mid-level management talent issues in China becoming severe. Frontier Strategy Group. Retrieved March 24, 2015, from http://blog.frontierstrategygroup.com/2015/01/mid-level-management-talent-issues-china-getting-severe/
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