Yuan Decline Tempts Walmart To Squeeze Suppliers

Walmart has faced accusations from its suppliers in the past that the retailer unfairly squeezes its small business partners. Most recently, the conglomerate was said to be facing legal action when reports emerged earlier this month that several suppliers filed a lawsuit against Walmart for contractual changes in payment terms that saw those suppliers waiting longer to get paid.

But a new controversy between Walmart and suppliers is brewing, and this time it can be attributed to the recent drop in the value of the Chinese yuan.

An exclusive report by Reuters published Wednesday (Sept. 23) said Walmart is looking for its suppliers to cut their prices in response to the yuan devaluation, a move that would impact the thousands of suppliers that run production operations in China.

[bctt tweet=”Walmart is reportedly looking for its suppliers to cut prices in response to the yuan devaluation.”]

Reports said Walmart has notified its more than 10,000 suppliers across the globe that have manufacturing facilities in China that Walmart is looking for a 2–6 percent cost reduction on general merchandise like apparel, home furnishings and appliances. The retailer said the decline in the yuan’s value should mean that suppliers pass on the savings to the consumer to achieve the “everyday low cost,” or EDLC, for which Walmart strives.

Reuters obtained the information from an unnamed source close to Walmart.

Two unnamed executives at two Walmart-partnered suppliers told reporters that EDLC is the term used by Walmart to keep consumer prices down. The executives said that they would be negotiating the price cuts requested by the retail chain.

A spokesperson for Walmart reportedly declined to comment on the matter.

China’s yuan saw a devaluation only weeks ago following economic turmoil and a stock market slump that sent shockwaves around global markets.

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