Running head: WALMART 1

Walmart: The kings of offshoring

Jack L. Woodman

Arizona State University

OGL 345-Unit 3

November 5, 2022
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Walmart: The Kings of offshoring

Walmart is one of if not the most profitable brick and mortar retail/grocery stores in the

United States. In the year 2019 it was placed squarely at the top of the fortune 500 list with a

massive haul of profit at $129 billion in the year 2018 (Brotherton-Burch, 2019). Given this

staggering amount of profit one might ask themselves how did they make this amount of money

when everything in their stores is typically far cheaper than in other stores. The simple answer to

this question Walmart’s proliferation of offshore operations. Walmart is the king amongst U.S.

companies that utilize offshore operations for both manufacturing and tax havens.

Let us start with the offshoring operations that Walmart runs. Our textbook defines

offshoring as " Transferring manufacturing and assembly operations to overseas locations"

(Fryer, 2015, pp. 116-117). How many of you readers that live in the United States have gone to

Walmart and picked up a toy or a shirt that has the now infamous “Made in China” sticker on it?

In an article written in December 2020, Newsweek states “Walmart estimates Chinese suppliers

make up 70-80 percent of its U.S. merchandise” (Quine, 2020). According to the same

Newsweek article they had plans to triple the export of goods from India to the valuation of $10

billion U.S. each year by 2027. Obviously, these articles will tell you that even though Walmart

is an American company with American ideals they must rely on offshoring to manufacture most

of the products they sell.

In 2017 Walmart imported roughly 874,000 shipping containers worth of products

making it the retailer that imported the most product to the U.S. from overseas. The company

Target was second on this list having imported 590,000 containers worth of product. Given the

amount of product they import does Walmart apply Kant’s theory of “the end in itself”? This

author believes they do their best to meet this ethical standard but my feign ignorance if
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presented with issues that violate this ethical standard. In fact, Walmart has produced a manual

of standards they maintain for their suppliers and the first tenant of standards they have is

“respect for the individual” (Walmart.com, n.d.).

Now let’s talk about the money that Walmart makes. According to the Alliance for

American Manufacturing Walmart was number one on the fortune 500 list and made an insane

$129 billion in 2018. Where does this profit go and how does Walmart avoid paying most of this

profit in taxes? Once again, the answer to this question can be found in offshoring. According to

our book, one of the reasons a company may engage in offshoring operations is to create tax

breaks and tax havens for themselves, while also reducing the cost of manufacturing (Fryer,

2015, pp.116-117). According to a 2015 CBS news report Walmart had $76 billion in offshore

tax havens, with the majority of these funds being located in country of Luxembourg ( Picchi,

2015). According to the same CBS news article, Walmart paid $6.2 billion in taxes, that same

year they reported profits around $121 billion. This means that only five percent of their profit

was paid into taxes. Is this low percentage an ethical amount of taxes to have been paid? It may

not seem morally right, but I view it as ethically right because they don’t seem to be violating

U.S. tax laws.

In this paper we discussed Walmart and it propensity to utilize offshore operations. We

spoke of their record profit of $129 billion in 2018. We then moved onto how much of

Walmart’s products are produced in China and their attempts to continue offshore product

manufacturing in China. After speaking about some of Walmart’s sources, we talked about how

much Walmart was importing and if they were party to some of Kant’s theories on ethical

responsibilities of corporations. Finally, we discussed how Walmart uses offshoring to protect its

money and create a situation in which they pay minimal taxes in the United States.
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References

Brotherton-Bunch, E. (2019, May 29). Can We Take a Moment to Complain About Walmart?

American manufacturing. https://www.americanmanufacturing.org/blog/can-we-take-a-moment-

to-complain-about-walmart/

Fryer, M. (2015). Ethics Theory and Business Practice. SAGE

Picchi, A. (2015, June 17). Report: Walmart has $76 billion in offshore tax havens. CBS News.

https://www.cbsnews.com/news/report-walmart-has-76-billion-in-offshore-tax-havens/

Quine, O. (2020, December 15). Walmart Triples India Exports as Major U.S. Companies Pivot

From China. https://www.newsweek.com/india-asian-countries-trade-war-walmart-1554632

Walmart Corporate. (n.d.). Standards for Suppliers. https://corporate.walmart.com/media-

library/document/standards-for-suppliers-english/_proxyDocument?id=0000015c-e70f-d3b4-

a57e-ff4f3f510000