Chinese Authorities Cite Walmart for Cybersecurity Violations

The Bentonville, Ark.-based company had no immediate comment.

The report came as Walmart in recent days has faced a backlash on social media as well as criticism from China’s anticorruption watchdog for supposedly stopping sales of products from Xinjiang, where the Chinese government has conducted a campaign of forcible assimilation against religious minorities.

The cybersecurity-related action against Walmart wasn’t out of the ordinary; it consisted of administrative penalties that came with warnings but no fines. Still, the report by the market regulator-backed news site was notable for its timing, coming just days after the anticorruption watchdog’s warning.

Last Friday, the ruling Communist Party’s Central Commission for Discipline Inspection warned Walmart that there would be a consumer retaliation if it removed Xinjiang-sourced products from its shelves.

China Quality News also reported Wednesday that the retailer had breached laws in recent years. “From 2017 to 2020, Walmart had violated laws related to food, health products, advertising and customer’s rights multiple times, and the market regulator had punished the company in accordance with relevant laws,” it said.

Public police records from last week showed that Walmart had been punished by Shenzhen police after the retailer allegedly failed to amend 19 cybersecurity vulnerabilities in its network system.

Western companies for years have faced some level of political and regulatory pressure operating in China. Even so, sudden major regulatory changes and online calls for consumer boycotts targeting Western companies have been on the rise in the country in recent years.

In March, fast-fashion retailer Hennes & Mauritz AB’s H&M brand became the target of a fierce online backlash after it said it would stop sourcing from the Xinjiang region, and the Swedish company’s online presence was wiped off the Chinese internet.

Last month, Chinese social-media users claimed Walmart had stopped selling products sourced from Xinjiang in its Walmart and Sam’s Club wholesale stores. Some online users threatened to cancel their Sam’s Club membership and boycott the chain. A U.S.-based Walmart spokesperson declined to comment at the time.

Xinjiang has become a source of geopolitical tension. Researchers say authorities in Xinjiang have detained as many as a million members of ethnic minorities in a network of internment camps as part of the government’s ethnic assimilation campaign, which they say also includes mass surveillance, forced labor and stringent birth controls. The U.S. government, along with some lawmakers from other Western countries, have said those policies amount to a form of genocide.

Beijing has dismissed the genocide charge as a fabrication, describing its campaign in Xinjiang as an innovative effort to counter religious extremism and terrorism.

President Biden last month signed into law the Uyghur Forced Labor Prevention Act, which forbids all imports from Xinjiang into the U.S. unless the products can be shown to have been made without forced labor.

This week, electric-car maker Tesla Inc. came under fire from activists and policy makers in the U.S. after it said it opened a new showroom in Xinjiang. Tesla didn’t respond to requests for comment then. Intel Corp. apologized to the Chinese public in an open letter last month after the chip maker asked suppliers to avoid sourcing from Xinjiang.

Write to Liza Lin at [email protected]