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Wal-Mart says found China pricing discrepancies in 2011

A shopping cart full of products is seen as a customer shops at a Wal-Mart store in Beijing, February 18, 2014. REUTERS/Kim Kyung-Hoon

(Reuters) - Wal-Mart Stores Inc (WMT.N) said it discovered discrepancies in pricing and inventory at its China operations in 2011 and has since reinforced its compliance policies in the country.

The issues were not material to the company's operations, Wal-Mart China spokesman Raymond Bracy said in a statement on Thursday.

Wal-Mart implemented a "prescriptive action plan" after an extensive investigation involving external legal and accounting firms. Leadership changes were made and disciplinary action taken, Bracy said in the statement, without giving details.

Bloomberg reported on Wednesday that Wal-Mart had used "questionable accounting and unauthorized sales practices" to make its retail business in China appear stronger at a time when transactions were slowing and unsold inventory was piling up.

These practices included bulk sales to other retailers and temporary mark-ups of inventory, Bloomberg reported, citing internal documents and interviews with employees. (http://bloom.bg/1um3AjR)

Bulk sales are common practice in developing markets and represent a "modest portion" of Wal-Mart's business in China, Bracy said in the statement.

Wal-Mart is battling stiff competition from local rivals in China, a market key to its international ambitions, where many consumers value safe and authentic food over the low prices for which the world's largest retailer is famed.

Wal-Mart, which has been in China for 17 years, is cutting jobs in China to help lower its costs in the world's second-largest economy.

Wal-Mart reported a 0.8 percent fall in China sales during the quarter ended Oct. 31, which it attributed to government austerity measures and deflation.

Wal-Mart's reputation for food safety in China has come under scrutiny after its "Five Spice" donkey meat was found to contain fox meat.

The retailer appointed Sean Clarke as Wal-Mart China CEO effective June 1.

(Reporting by Adam Jourdan in Shanghai and Supriya Kurane in Bengaluru; Editing by Gopakumar Warrier and Robin Paxton)