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Good News from China

New York — It may seem tasteless to say there is good news from China, given all its suffering from last week’s catastrophic earthquake, but there is good news. Wal-Mart, which gets my North River Management Grade A, will respond to quality problems on Chinese goods by demanding "traceabality information" from Chinese suppliers. This should drive cash velocity improvements across large sections of Chinese industry, good news for everyone.

You can see from these data that Wal-Mart is well ahead of competitor Target, which gets my North River Management Grade C+, down from B in FY 2007, taking its stock down 17%. Wal-Mart’s North River Velocity of Cash Index is 41 points better. But, Wal-mart has struggled with inventory management in recent years — its signature strategy is putting more on the shelves with fewer stockouts and less inventory than anyone else — and its stock price has languished as a result.