Wal-Mart China Temporarily Shuts 7 Stores Amid Mislabeling Probe

Wal-Mart Stores Inc. (WMT), the world’s largest retailer, was ordered to halt operations at seven stores in southwest China as the local government investigates accusations that it mislabeled some pork products as organic.

Wal-Mart closed the stores in Chongqing for 15 days starting yesterday after being ordered by the city’s industry and commerce administration, Anthony Rose, a Hong Kong-based company spokesman, said by phone today. Some employees have been detained, the company said in an e-mailed statement.

“The closure of some of the stores in Chongqing for the next 14 days will allow us time to focus on implementing corrective actions,” the statement said. Wal-Mart said it believes the order was because of the mislabeling, in which “the rights of consumers were infringed.”

The Chongqing government fined Wal-Mart 2.69 million yuan ($423,000), Xinhua News Agency reported yesterday, citing Huang Bo, director of the Chongqing Administration of Industry and Commerce. The retailer was accused of selling 63,547 kilograms of falsely labeled pork over the past two years, the report said. Rose could not immediately comment on the reported fine and amount of pork sold.

Wal-Mart, based in Bentonville, Arkansas, is cooperating with the investigation and is sorry for inconveniencing customers, the statement said. It set up a hotline to address customers’ questions, according to the statement.

Wal-Mart, the world’s largest listed company, had $7.5 billion annual revenue in China, where it has 329 stores and 107,000 employees, Asia chief executive officer Scott Price said March 30. The retailer, with net sales of more than $400 billion last year, entered China in 1996.

China fined 19 Wal-Mart and Carrefour SA (CA) stores a total of 9.5 million yuan for misleading pricing, the National Development and Reform Commission said on Feb. 22.

The southern Chinese city of Shenzhen fined Wal-Mart, Carrefour and Renrenle Commercial Group Co. a combined 1.8 million yuan for misleading prices this year, Guangdong television station reported on Aug. 2.

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

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