A bigger question is how effectively Wal-Mart manages and audits its suppliers in China. In a nation where authorities fail to police the factories, has Wal-Mart kept its supply network clean?

Not according Bo Lin, again, quoted in an investigative story from the Chinese newspaper 21 Century Economic Report.

Compared to the visible cost hikes, he said, the real burden is the hidden rules. He claimed that he was forced to pay kickbacks to buyers and quality control specialists of up to 15 percent, which can take all profits away.

Wal-Mart China insisted that it prohibits kickbacks. But Bo Lin explained: Wal-Mart can't control its partners, including brokers and third-party agencies.

In my humble opinion, in order for Wal-Mart to implement the sustainability strategy successfully in China, it must streamline its supply system and minimize the tiers/layers of suppliers. But the reason suppliers choose to contract Wal-Mart orders out is oftentimes the low profitability of the business. If the prices Wal-Mart offers can only be achieved by factories breaking environmental, labor and taxation laws, is there any room for sustainability to grow?

So when cost control stifles sustainability, which one will Wal-Mart choose? Or will it be able to find something in between?