India Protests Wal-Mart’s Entry

It seems that Wal-Mart is in denial of the reality of opening up shop in India. All over the place in the news today are stories discussing India’s vehement protests against Wal-Mart. The retailer is trepedatiously trying to enter the Indian wholesale market with Bharti Enterprises, a deal that’s been nearly a year in the making. Now, shopkeepers from across the country are protesting the deal, saying that Wal-Mart’s entry into the Indian market will essentially obliterate local traders and retailers. From Forbes:

Protesters accused the Bentonville, Ark.-based giant of circumventing Indian laws on retail to enter through the back door. “The livelihoods of retail traders are at stake. If big retail giants like Wal-Mart and Reliance come into the country, small traders would be finished,” said Praveen Khandelwal, general secretary of the Confederation of All India Traders in New Delhi.

Both the ruling Congress Party leader Sonia Gandhi and Prime Minister Manmohan Singh have acknowledged the dangers of corporations penetrating the retail sector, said Dharmendra Kumar, director of the group India FDI Watch and national coordinator for the movement against organized retail.

He said Wal-Mart, as well as big Indian corporations, should be prevented from carrying out their ambitious retail plans until a thorough study has been conducted by an independent special task force including stakeholders on the impact their entry will have on the small-scale retailers. Companies like Reliance, the Tata family and the Aditya Birla Group are also making an aggressive push into retail.

The Chicago Tribune adds:

The rally underscored growing tensions in India as the country’s economic boom moves beyond high-technology and other big businesses that employ relatively few and begins to transform parts of the economy that provide livelihood for hundreds of millions.

One shopkeeper in the BBC’s coverage asked:

“Why don’t they stay in America? Why do they have to come here?"…

“The supermarket chains tell customers that prices will be cheaper in their stores, but that’s only at the beginning.

“Once they’ve established themselves, and wiped out the competition, then they can control the prices. It’s happened all over the world. Consumers think they will benefit - but they won’t.”

Despite protests, India remains a lucrative prospect for the struggling retailer, and the company has vowed to persevere. With domestic stores struggling, markets like India remain Wal-Mart’s best hope for survival. As MarketWatch points out:

With its 1.1 billion people and growing middle class, India is considered a rich prize for retail chains like Wal-Mart, who see a country dominated by an estimated 12 million small shops that can be easily muscled out by larger operations.

Wade Rathke, founder of India FDI Watch, weighed in on the situation:

We will continue to fight Wal-Mart and anybody who follows its model. We have been educating Indian people about the perils of monopoly retail. Many members of the Indian Parliament understand the problems that can arise if Wal-Mart and other foreign companies enter Indian retail. We will make sure that the voices of Indian traders and farmers get heard in global media.

Posted by Alex Goldschmidt on Friday, August 10, 2007

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