Now Mr. Shao is scrambling to line up other buyers to keep production lines running at Boshan Linar Garments Co. in Shandong.

"It's always hard to make money from Wal-Mart orders," says Mr. Shao, who heads Boshan's sales department, "but without them, we are finished."

A softer U.S. economy, rising gasoline prices and business miscues have left the world's largest retailer with a growing amount of unsold goods, including about $2 billion worth of clothes and home-decor products. With about 10% of Wal-Mart's revenue coming from apparel, the excess has several analysts trimming profit estimates for this year by as much as five cents a share.

As Wal-Mart struggles to pare down stocks and get sales growth back on track at its 4,000 U.S. stores, some of the company's suppliers in China are feeling the pinch.

For Boshan, the warning signs started last year when Wal-Mart scaled back its order for the fall 2007 season, from 500,000 pieces to about 100,000, Mr. Shao says.

One manufacturer of pajama pants, Zhejiang Furun Co., says it was selling about $3 million in clothing a year to Wal-Mart until this year, when orders ceased.

Chen Jiayong, a manager at Nanjing Yongxin Fashion Co. in Jiangsu province says his company is finishing up the last order in its pipeline for Wal-Mart now---70,000 cotton coats that will sell for about $10. That's less than 25% of last year's order, and the company stands to lose about $780,000 in revenue this year, Mr. Chen says.

Nanjing Yongxin is also feeling pressure from the appreciation of the yuan, the value of which has risen by 8% since mid-2005. "Not only Wal-Mart but many other customers in Europe and America canceled orders this year," Mr. Chen says. The lost orders totaled about $2.6 million.

Yan Erhao, manager of Weifang Zuo Bang Garment Co. in Shandong province, says his 50-person company lost its Wal-Mart business last year and is still struggling to find other customers. In a stroke, Weifang lost 60% of its revenue.

It is difficult to tell how much of the cutbacks are related to Wal-Mart's inventory pile-up and what orders are simply being shifted to suppliers with lower production costs or different capabilities. Wal-Mart didn't respond to requests for comment.

But the challenges are a sign of the risks to China's companies and its economy if U.S. consumer spending slows sharply. About 20% of all Chinese exports go to the U.S., its biggest overseas market. Wal-Mart imported $18 billion in goods from China in 2004.

China is likely to weather all but the most extreme of slowdowns, many economists say. But the fallout from Wal-Mart's problems shows how difficulties at one end of the global supply chain ripple through to the other with the potential for significant economic disruptions, at least locally.

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