China’s anti-corruption watchdog criticized Walmart Inc. WMT 1.06% on Friday, warning of a consumer boycott following reports that the world’s largest retailer had stopped stocking products from Xinjiang in its China-based Walmart and Sam’s Club stores.
Walmart had no “justifiable reason” for taking down products from an entire region, the ruling Communist Party’s Central Commission for Discipline Inspection said in a strongly worded statement Friday. The agency added that the move was prompted by ulterior motives and showed “stupidity and short-sightedness.” The American big-box retailer would suffer the consequences for its actions, CCDI said.
Walmart declined to comment Friday.
Bentonville, Ark.-based Walmart sparked a social-media backlash earlier this month over comments online that shoppers were unable to find products typically sourced from Xinjiang on online stores operated by Walmart and Sam’s Club China, its members-only wholesale retail chain.
Xinjiang, a northwestern region in China home to millions of Muslim minorities, has stirred up geopolitical tensions between the U.S. and China, with the U.S. accusing Chinese authorities of engaging in genocide and forced labor there. China has denied both accusations, adding that its policies have been in the name of national security and to combat terrorism.
As word of Walmart’s alleged Xinjiang product removal spread online last week, some users posted screenshots of their conversations with online customer service agents, who had told them products from Xinjiang were out of stock. Others wrote online they would be giving up their Sam’s Club memberships. Party-controlled media also added to the debate.
Checks by The Wall Street Journal on Walmart and Sam’s Club’s e-commerce stores on Dec. 24 and on Friday turned up no products from Xinjiang, but red dates from Xinjiang were found in a Walmart supermarket in downtown Beijing last weekend.
Before Walmart’s run-in with China, U.S. semiconductor giant Intel Corp. had apologized to the Chinese public for a public letter to its suppliers asking them to refrain from sourcing from Xinjiang. On Dec. 23, President Biden signed the Uyghur Forced Labor Prevention Act into law. The law bans all imports to the U.S. from the region unless companies can certify that such products are free from forced labor.
In March, Hennes & Mauritz AB’s H&M found its presence had been wiped off China’s main e-commerce, ride-hailing, daily-deals and map applications, after the Swedish clothing brand’s decision to stop sourcing from China’s Xinjiang region.
On Friday, the CCDI said the actions by companies such as H&M, Intel and Sam’s Club were akin to “using their own actions to hit their face.” The agency called the explanation supposedly given by Sam’s Club’s customer service representative a “self deceiving excuse.” It calculated that Walmart was earning about 1 billion yuan ($157 million) in memberships from the more than 4 million members it had in China, and warned the company not to overstep its boundaries.
“China is Walmart’s second-largest overseas market, if they want to stand firmly in the Chinese market, they need to show enough sincerity and attitude, respect the facts, distinguish right from wrong, respect China’s principles and the feelings of Chinese citizens,” the agency wrote. “If not, Chinese citizens and consumers will use their actions to respond resolutely.”
China is home to 434 Walmart and Sam’s Club stores, covering more than 69 million square feet, as of the end of January 2021, making the country Walmart’s second-largest international market by retail square footage, according to the company’s most recent annual report. Mexico, where the big box retailer runs almost more than 2,600 stores, is its largest foreign market.
—Sarah Nassauer contributed to this article.
Write to Liza Lin at Liza.Lin@wsj.com
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