For many, if not most, companies and especially retailers, the great wildcard that is the “massive” Chinese market with the potential of hundreds of millions of buyers in the country's nascent middle class, has been a slam dunk when it comes to boosting stock prices. After all, what can go wrong? America's largest retailer was one of those hoping to capitalize on just this shareholder euphoria for Chinese exposure, and just like everyone else, it milked its Chinese exposure for many years. And then, unexpected everything did go wrong: as Bloomberg explains, “After years of heralding China as one of its best markets, Wal-Mart in August said its performance there was among the worst in its major countries.”

How is that possible?

Well, as Bloomberg further explains, China's reputation of fabricating every single number is there for a reason. And what's worse, it isn't just China, but it also includes U.S. corporations operating in China. Such as Walmart, which succeeded in pulling the wool over its shareholders' eyes for years thanks to “questionable accounting and unauthorized sales practices, according to employees and internal documents reviewed by Bloomberg.”

Among these: bulk sales to other retailers and some sales allegedly booked when no merchandise left the shelves. These illegal practices, and much more “made business appear strong even as retail transactions slowed and unsold inventory piled up, these people and documents say.”

And nobody cared, because WMT (and every other) stock went up, clearly not on fundamentals but on the back of the biggest equity bubble blown by central banks in history. And it wasn't until the relentless price appreciation finally slowed down that someone started asking questions, however with accountants and regulators both in China and the US corrupt and complicit to the underlying fraud, it goes without saying that nobody did or ever will go to prison.