The Wal-Martization of the World?

As Wal-Mart prepares to roll out the details of its joint venture with Bharti Enterprises later this month, Indian politicians are already preempting any foreign takeover of the local retail economy.

Recently, Sonia Gandhi, president of the Congress Party, sent a letter to Prime Minister Manmohan Singh asking him to reconsider expanding foreign direct investment (FDI) in retail until it is determined what impact this will have on small shopkeepers. This could certainly be chalked up to political strategy as provincial elections in key northern states, with powerful trade lobbies, are not far off.

Nonetheless, Gandhi wields tremendous power and influence and has a past record of advocating for the interests of economically marginalized Indians. In conjunction with the Left parties, who are the most vocal opponents of Wal-Mart’s entry, the burgeoning anti-Wal-Mart movement in India could become a powerful force to reckon with.

For well over a decade, Wal-Mart has become a strong international player and gained significant experience in the global retail market. It has learned from its mistakes in Argentina and South Korea where the retailer went solo and the Wal-Mart brand respectively led to dismal sales or a full retreat from the country.

In Mexico, it took the joint venture approach, and the tremendous success of the Wal-Mex empire is a testament to its design. For those who claim that this will not happen in India, it is important to note that Mexico is similar to India in many ways, with 70% of its population living below the poverty line and a strong local retail presence.

After 16 years, Wal-Mart has captured 25% of the Mexican retail market and it is very possible that a similar situation could happen in India if the government does not take steps to curtail FDI in retail and monitor Wal-Mart and Bharti’s joint venture.

As Wal-Mart learns its lesson from its failures in the world, it is time for those in India concered about Wal-Mart to learn similar lessons. It is important for the Wal-Mart opponents to learn about Wal-Mart’s destruction of small traders’ livelihoods worldwide, especially in the U.S., and to establish regulations to prevent that from happening in India.

Posted by Vasudha Desikan on Wednesday, February 07, 2007

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