Farmers Organize to Fight Wal-Mart in India
Wal-Mart is relying more and more on international stores for company growth, but expansion overseas is proving difficult. The company has been met by massive opposition in India, including protests and, now, organized efforts to challenge the retailer. Wal-Mart is already having trouble expanding in the United States; if international challenges continue, it could mean serious trouble for the company.
Farmers take on Wal-Mart in India [Reuters]
Farmers and traders, opposed to the entry of private retail giants such as Wal-Mart, are building a chain of superstores as part of efforts to sell their produce directly and stop prices being set by a few big players.
The effort is being backed by authorities in the western state of Maharashtra, which says infrastructure costs for the project could be subsidized.
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Posted by Alex Goldschmidt on Thursday, January 03 | 13 comments | Permalink
The Minuses of Global Retail in India
For 750 Million...Humans [Outlook India]
The government has so far been zealous in its commitment to opening up the retail sector. And that too, much before the wto tells us to do so. Big corporate houses and mncs have been invited to invest in retail purportedly with the intention of attracting foreign direct investment (FDI) but mainly to benefit some mighty economic entities. And all this is being done without a care for the livelihood of 750 million farmers and over 40 million small retailers.
The negotiations on the General Agreement on Trade and Services (GATS) are still on so there is no call for any country to open up its retail sector just yet. But, taking a cue from a suggestion made in the Economic Survey 2004-05, policymakers are busy drafting a proposal to open up the retail sector for FDI. This, when even the mandated agenda of the government, the National Common Minimum Programme, does not call for its opening up.
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Posted by Vasudha Desikan on Wednesday, January 02 | 0 comments | Permalink
REITs May Be On India’s Agenda
A story in The Wall Street Journal reports today that India - a country very much on Wal-Mart’s international horizon - may be considering introducing real estate investment trusts, or REITs, as early as 2008. According to the story, a move like this by India’s Securities and Exchange Board ("SEBI") could be a very large step in deregulating its quickly growing real estate market.
REITs were first introduced here in the United States back in 1960 by a Congress aiming to make investments in large-scale, income-producing real estate accessible to small investors. According to the National Association of Real Estate Investment Trusts, REIT stockholders today benefit in much the same way as any other shareholder does:
In the same way as shareholders benefit by owning stocks of other corporations, the stockholders of a REIT earn a pro-rata share of the economic benefits that are derived from the production of income through commercial real estate ownership.
SEBI has noted, however, that REITs in the U.S. became a popular structure for investing in real estate only after Congress amended tax laws in 1986, granting REITs tax benefits if they conformed to certain requirements. India is expected to follow a different model, such as those used in the U.K. and Asia - among other things, there will more than likely be a limit on how much an Indian REIT can borrow. In the U.K., real estate investment is done through what are called “pooled managed vehicles” or “PMVs” which may see tax benefits based on their investor profile, though there are no tax benefits for the regular PMVs.
Of course, all of this talk ties in with Wal-Mart because the company is currently getting grilled by The Wall Street Journal for its use of a captive REIT in North Carolina (actually they’ve used the REIT nationwide, but North Carolina is currently where the headlines are being made). Not having devoted much schooling to studying Indian tax law, it is impossible for me to say if deregulation in India’s real estate market could lead to the kind of abuses there that companies such as Wal-mart have forged ahead with here. Still, its something to keep an eye on, and we hope The Wall Street Journal and others will do just that.
India may introduce REITs [The Wall Street Journal]
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Posted by Corey Himrod on Wednesday, December 12 | 6 comments | Permalink
Some Thoughts On The Wal-Mart “Phenomenon”
Wal-Mart Will Improve Quality, Service [The Hindu]
Retail consultant John Williams is certainly not carried away by the whole big Wal-Mart phenomenon. The retailer is no doubt known for its successful best practices, but there have been episodes which have put the brakes on Wal-Mart’s success story, he says.
Williams does have a word of caution for the retailer, especially on what to expect in India. He believes Wal-Mart will see success in the country provided it learns from its past mistakes (Wal-Mart had to pull out of Korea and Germany after it failed there) and adapt to local needs, says Williams, Founder, J. C. Williams Group, a retail consultancy firm based in Toronto. He was in Bangalore recently in connection with a retail seminar organised by Bangalore-based retail consultants RAMMS. (RAMMS and J.C. Williams are joint venture partners.)
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Posted by Vasudha Desikan on Thursday, December 06 | 0 comments | Permalink
The Wal-Mart Connection
Amidst the holiday shopping season and on the heels of massive toy recalls, products manufactured in China are a hot topic. In recent Congressional hearings, blame was cast on entities ranging from the CPSC to manufacturers to the Chinese government. Oddly, retailers and specifically Wal-Mart were rarely mentioned.
With Wal-Mart as the nation’s largest toy seller and China’s seventh largest trading partner, it is disturbing that the behemoth retailer takes no responsibility for the negative impact of its cost pressures on manufacturers. For years manufacturers have shifted jobs overseas, where labor is cheaper and safety regulations are lax. The result is no secret: Wal-Mart’s cost pressure on manufacturers and the Chinese factories which supply them is manifesting itself in the form of both unsafe working conditions and unsafe products.
As the Mattel toy recall drama unfolded this summer, our Hong Kong-based organization, Students and Scholars Against Corporate Misbehavior (SACOM), released a report regarding appalling worker conditions at five toy factories in China. Kam Long toys, one of the surveyed factories and a direct supplier to Wal-Mart, was found an unsafe and inhumane workplace for thousands of Chinese toy factory workers.
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Posted by Jenny Chan on Tuesday, December 04 | 38 comments | Permalink
Lowering Sourcing From India
GAP And Wal-Mart May Scale Down Sourcing From India[Economic Times]
The US recession story is well on its way to Indian shores. The $9 billion domestic garment export industry, already reeling under an appreciating rupee and allegations of labour rights violations, is now being hit by a slowdown in the US market, as consumer spend on clothing remains sluggish in the run up to peak Christmas season sales.
In the past few weeks, several major retailers like Wal-Mart, Gap and Target have said that they were not expecting the festive season rush to be the same as every year. Some of them have warned of the bleak scenario continuing well into next year.
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Posted by Vasudha Desikan on Thursday, November 22 | 0 comments | Permalink
India Might Be Harder Than Wal-Mart Thinks
Mumbai store closes after attack on private retail [Reuters]
Opposing the entry of private retail giants like Wal-Mart into India forced a superstore in Mumbai to close down on Monday, the first such attack in the city, police said.
Display windows and panes of a store belonging to Indian retailer D-Mart were broken with stones and sticks, forcing its owners to close it down.
Security at other malls and supermarkets in Mumbai’s northern suburbs had been increased to prevent possible fresh attacks, said police officer Ramrao Wagh.
Fearing loss of livelihood, traders, farmers and small shopkeepers oppose plans by foreign and local companies to introduce western-style supermarts into India’s fragmented $350 billion market expected to double in size by 2015.
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Posted by Alex Goldschmidt on Wednesday, October 24 | 0 comments | Permalink
Wal-Mart Holds Out a Poisoned Apple to India
Wal-Mart makes big promises about improving food distribution in India - but India should be wary of Wal-Mart’s temptations. Food distribution is similarly scattered in China, where Wal-Mart has had stores for several years. But just recently stories have surfaced about Wal-Mart stores in China selling pork dyed with illegal (and toxic) additives. Far from raising the standards of food production and distribution, Wal-Mart seems to use lax regulatory practices as a chance to do what it does best: sell low cost, low quality products and hope no one notices when products turn dangerous.
A Backlash for Big Retail in India [Time]
October is the beginning of India’s festive season, a time when shopkeepers’ profits soar amidst the gift-giving and all-round revelry tied to Hindu holidays like Dussehra and Diwali. Last week however, some 7,000 small shopkeepers, street vendors and traders shuttered their businesses to gather in the district of Azad Maidan in south Mumbai (formerly Bombay). Carrying placards saying SAVE SMALL RETAILERS, they forewent the day’s earnings in order to march in protest against big national and international chain stores like Reliance Retail and Wal-Mart, who the shopowners say are threatening their livelihoods.
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Posted by Alex Goldschmidt on Wednesday, October 17 | 11 comments | Permalink
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