The company announced the new initiative at a conference in Beijing, in the wake of last year's crisis over toys and other products made in China, and more recently the scandal of poisoned milk.
”I firmly believe that a company that cheats on overtime and on the age of its labor, that dumps its scraps and chemicals in our rivers, that does not pay its taxes or honor its contracts, will ultimately cheat on the quality of its products,” the company's chief executive, Lee Scott, said at the conference.
”And cheating on the quality of products is the just the same as cheating on our customers. We will not tolerate that at Wal-Mart.”
Although he did not accuse specific factories of breaking the law, the conference was attended by a raft of Wal-Mart's suppliers and was clearly intended as a warning.
Wal-Mart, along with other major American and multinational firms, regularly come under fire for being reliant on “sweat-shop” labour.
Mr Scott appeared to be trying to blame Chinese firms for both poor quality and for factory abuses.
He gave no details of what new quality targets would be introduced. But Mike Duke, the vice-chairman of the firm's international division, said the company would make suppliers responsible for sub-contractors' standards.
The company will introduce a certification system under which suppliers guarantee they comply with local laws, regulations and social and environmental standards, including emissions, treatment of waste and toxic substances.
The contracts will be imposed worldwide by 2011.
However, breaching the contracts will not automatically lead to Wal-Mart refusing to buy products. The company would “work with” those who failed tests, and would only ban further purchases from those who did not then improve.
Nor did the company explain how improving social and environmental standards would improve the quality of products except in related areas.
The company recently laid off 180 workers from its China sourcing headquarters, and handed over large parts of its quality control operation to a specialist firm of auditors, Intertek.
Geoff Crothall, of China Labour Bulletin, a Hong Kong-based organisation which monitors factory conditions in China, said Wal-Mart had conducted audits of its suppliers for many years, as had many companies.
But factories are adept at fooling auditors by sending child labour home when inspectors visit, or even running “shadow factories” where work is conducted without the buyers knowing.
Mr Crothall said Wal-Mart policies forced factories to resort to illegal working conditions to fulfil unrealistically short order times and other demands.
”Consumer demand for new lines and cheap products in the United States and Europe is ultimately placed on the heads of workers in Chinese factories,” he said.
The initiative comes as Chinese export manufacturers feel the strain of collapsing consumer confidence in western markets and increasing costs at home.
More than 3,000 toy manufacturers in China - half the total - have gone out of business this year, while tens of thousands of clothes factories are closing.
Mr Scott appeared to prepare the way for higher prices in his famously cheap stores as the falling value of the dollar against the Chinese currency, the yuan, kicks in. He said both company profits and store prices might be affected by his new initiative.
Wal-Mart, which owns Asda in Britain, is the biggest single importer of Chinese-made goods into the United States. It expects to buy $9bn worth of goods in 2008, a considerable decline on recent years.
Meanwhile, the United Nations said it was working with the Chinese government to improve the country's food and product safety system after 50,000 children fell ill from drinking milk poisoned with the chemical melamine.
At least four children died, and the crisis spread across the world as companies withdrew food containing Chinese dairy products.
The World Health Organisation's head of safety, Jorgen Schlundt, said China had too many overlapping agencies responsible for the issue.
”We see that a disjointed system with dispersed authority between different ministries and agencies resulted in poor communication and maybe prolonged (the) outbreak with a late response,” he said.