2007-11-17, China's View of Wal-Mart: Big Partner 1

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To see first-hand how the promise of a vast new market for America was playing out. I headed for China and the heart of its new industrial revolution, Shenzhen, south China's miracle city. Twenty years ago, this was all rice fields. Today, it's a sophisticated city of seven million. Its astonishing rise orchestrated by China's leaders and ignited by a Chinese currency devaluation in the mid¹ 90s, that dramatically lowered its export prices. It's the opening of China. China is a communist country and for the longest time, we had closed doors. And when they opened up to western businesses, the floodgates opened basically and it's something that you just can't stop.

The boom seemed endless. North of Shenzhen, I found an entrepreneur, who was among the first to spot opportunity in the new China.

Well, these are the products we make, um, this gives you some idea of ...

Australian Donald Hey came to south China twenty years ago.

I was in this part of the world and I could see, I saw the, the cheap products come out of Japan. And I saw then that market went to Korea and then it went to Taiwan. And I said hold it, hold it, hold it, the next one is China. Igotta get here.

The backbone² of China's new industrial might is the flood of young Chinese pouring into this industrial province. An area no bigger than Missouri, now teeming³ with more than forty million migrant workers. They come to work and live at the factories. At Hay's company Hayco, they make a hundred dollars a month or about fifty cents an hour. Other companies pay as little as 25 or 30 cents an hour. They want to work. They want to earn the money. They want to get forward. And they will do anything to move forward.

Today, Hayco supplies electric toothbrushes and home cleaning products to big American companies like 3M, P&G and Wal-Mart. What's happened is the world has come here as a marketplace. It's like a supermarket for manufacturing today. And the quality is up to world standards a long way past world standards. And that's just what's happened in southern China.

All across the region, I saw evidence of the mass corporate⁴ migration⁵ into China. Highways lined with factories like airport hangers⁶. Hundreds of billions of dollars in western investment have poured into China in the past twenty years. And Wal-mart is here too. It has 35 supercenters in China. And behind one of them here in Shenzhen, I found Wal-mart's global procurement⁷ center, a huge buying operation tapping directly into China's new workshop of the world.

I interviewed people in Wal-mart's global procurement center in Shenzhen. And I asked them about the total number of Wal-mart suppliers. And I was told that Wal-Mart has 6000 global suppliers. 80% of those suppliers are in China.