business news in context, analysis with attitude

On the subject of Wal-Mart deciding to acquire the 49 percent of Japanese retailer Seiyu that it does not already own, reported here yesterday on MNB, we got the following email from MNB user Julia Hidy:

Way back when, I believed that Wal-Mart would be forced to pull out of Japan. Well, I'm glad you were right. But, based on the new developments, I believe it will only be a matter of time - say between 4-5 years - and Wal-Mart will be ready to find a buyer for their Japanese 'investment.'

And I'll bet a quarter that Ed Kolodzieski is not only on a short leash, but that they have a choke chain on him too. I don't envy the man.

The net net is that Wal-Mart expects to make money on their investment. I'd love to see the ROI that's been projected on the 100% Wal-Mart owned Seiyu. Bet it looks good on paper. I still doubt that a company that has already shown it's having trouble adapting to Japanese cultural mores and societal etiquette vis-a-vis respect for people is going to ultimately be successful in Japan where respect is so crucial and ingrained at every level of society. I think I'll pop some popcorn and wait on the sidelines. It will be interesting to watch the parade as it passes by.

We had a piece yesterday exploring people’s willingness to spend more money on products they see as socially correct, based on a study conducted by a pair of Harvard researchers. This led MNB user Carla Baughman to write:

This statement raised red flags for me: “And when Hiscox and Smyth raised the prices of ‘fair labor’ products, people bought even more than before. So, at least for ABC Carpet, being nice is good business.”

While there is probably a sound argument for "fair labor" products to be priced higher than the "we don't know what kind of labor" products, it is not provided in the context here. I would be concerned that manufacturers/marketers use that label to mark up prices to merely increase their own profit margins - at the expense of the socially minded consumer.

KC's View: