BENTONVILLE, Ark. (AP) – Chinese companies may be the next source of job creation in Wal-Mart’s hometown, following in the footsteps of U.S. companies that have flocked to northwest Arkansas to work more closely with the world’s largest retailer.
A leading executive search firm, Cameron Smith Associates, and another area company that works with foreign producer,s will host a conference in China next month to show manufacturers there how they can boost business by opening local offices to manage their accounts with Wal-Mart Stores Inc.
Trade experts say the timing is right. Chinese producers, who so far mainly sell to the U.S. market through intermediaries, are expected to start moving into the U.S. in the coming years with their own offices to bypass importers, to keep a larger slice of sales revenue for themselves and to gain a better sense of what their U.S. customers want.
“Wal-Mart is a very important customer for Chinese producers,” said Myron Brilliant, vice president of the Asian-U.S. Chamber of Commerce in Washington, D.C. “One can only expect that Chinese companies are going to do what U.S. companies do, which is to get closer to their customers.”
No official registry of Wal-Mart suppliers with local offices exists. And Bentonville/Bella Vista Chamber of Commerce officials say they know of no Chinese firms in the area that do business with Wal-Mart, although some from Taiwan and a handful of other foreign nations have local offices.
The latest figures available, in 2004, show Wal-Mart bought about $9 billion in goods from China directly and another $9 billion indirectly, or goods produced in China for another company and then sold to Wal-Mart.
Wal-Mart doesn’t provide a public breakdown of its overseas sources, but it has said that China is by far its largest single foreign supplier.
Chief Executive Lee Scott has said Wal-Mart wants to buy more products directly from Chinese producers rather than going through importers, although he has declined to publicly set any targets by percentage or dollar amount.
Cameron Smith, whose firm in nearby Rogers specializes in hiring for Wal-Mart supplier teams, expects 2,000 new executive-level positions could be created over the next three to five years by Chinese manufacturers opening local offices.
His firm and Global Supplier Development are hosting the two-day conference in the southern Chinese manufacturing center of Dongguan that will feature speakers with a professional background in retail and in working with Wal-Mart.
“The goal is not to increase Chinese imports. The goal is to show Chinese companies how they can optimize their business by working directly with their customer, Wal-Mart,” said Gary Dunn, a former Wal-Mart international executive and now partner in Global Supplier Development, a Rogers-based company that targets foreign suppliers.
Smith said Wal-Mart doesn’t tell its suppliers to locate in northwest Arkansas. But competitive pressure among suppliers has kept the number growing steadily from less than 50 in 1994 to over 1,200 companies today.
That growth is one of the main factors that has driven a red-hot economy in the Benton-Fayetteville corridor, economists say.
Average house prices in the region have risen from about $97,000 in 2000 to about $218,000 now, according to the Bentonville/Bella Vista Chamber of Commerce. Per capita income rose 19 percent, nearly twice the national rate, to $27,112 in 2004 from $22,834 in 2000.
Many of the thousands of jobs at the local offices are executive-level positions with salaries over $100,000 analysts say. Local offices range from one-person home enterprises to the roughly 300 people managing Proctor & Gamble’s account with Wal-Mart.
By opening offices near Wal-Mart’s Bentonville headquarters, U.S. companies can work more closely with the retailer on issues like product development, delivery schedules and quality control. Smith says Chinese companies can profit as U.S. companies do from a closer physical presence to buyers at Wal-Mart headquarters.
“The idea is to recruit Chinese producers to open offices here that would be staffed by specialists hired in the United States,” Smith said.