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Wal-Mart to upgrade China vendor compliance after state TV criticism

Employees stand in front of the gate to a Wal-Mart Supercenter in Chongqing municipality October 24, 2011. REUTERS/Stringer
Employees stand in front of the gate to a Wal-Mart Supercenter in Chongqing municipality October 24, 2011. REUTERS/Stringer

HONG KONG (Reuters) - U.S. retailer Wal-Mart Stores Inc said on Wednesday it will upgrade its vendor compliance process in China, requiring more documentation and making use of a computer-based system to help suppliers manage associated paperwork.

The announcement came after state-owned China Central Television (CCTV) criticized the world's No. 1 retailer for circumventing its quality control process and fast-tracking some products with higher profit margins.

Wal-Mart will "ensure the correct documents and other required items are in place before the products are sold in our stores," the retailer said in a statement.

Documentation includes labels that accurately reflect ingredients, government test reports, China Compulsory Certificates, sample products or photographs, copies of manufacturing permits, details substantiating health claims and claims such as "organic" and "world-famous", official barcodes and papers on intellectual property.

"This process requires the collection, organization, filing and retention of well over one million documents annually," the company said.

"Wal-Mart China has now invested in a computer-based system enabling vendors to upload all required legal documents. This system was piloted in September of 2013 and is now ready for broad-based application across the supply chain."

Wal-Mart, which operates more than 400 stores and warehouses in China, said immediately after the CCTV report last week that it keeps a close watch over its supply chain.

It said it only uses its expedited special approvals process in specific circumstances such as when a supplier changes the size of a product or switches distribution agents.

In the statement on Wednesday, the company explained additional steps it would take to address supply chain concern.

Wal-Mart is the latest in a series of foreign companies CCTV has taken to task on issues ranging from pricing to poor quality products and shoddy customer service.

Targets of the reports, which have had mixed results, include coffee chain Starbucks Corp , consumer electronics groups Apple Inc and Samsung Electronics Co Ltd <005930.KS>, the KFC restaurants of Yum Brands Inc , drugmaker GlaxoSmithKline PLC and car brands Audi from Volkswagen AG , Subaru from Fuji Heavy Industries Ltd <7270.T>, and Jaguar Land Rover from Tata Motors Ltd .

(Reporting by Clare Baldwin; Editing by Christopher Cushing)

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