Wal-Mart has admitted that its profits could be dented by plans to force Chinese suppliers to meet new quality and environmental standards or risk losing its business.

Wal-Mart chief executive Lee Scott told The Daily Telegraph it was “very possible” that Wal-Mart would make a smaller profit margin on certain non-food products as a result of the plan.

Scott said at a gathering of more than 1,000 suppliers in Beijing: “I firmly believe that a company that cheats on overtime and on the age of its labour and that dumps its chemicals in rivers will ultimately cheat on the quality of products. And cheating on products is the same as cheating on customers.”

Wal-Mart has focused on improving its image on environmental and social issues following growing criticism in the US.

Wal-Mart’s UK rivals said that they are not in the same position as the US retailer, which owns Asda.

A spokeswoman for Tesco said it had not been affected because it already has a firm stance on standards in China.

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