The Bully of Bentonville

[Contrarian]

WASHINGTON: All rise to behold the behemoth of Bentonville. And if you are acorner store owner or local retailer, run or risk getting crushed.

Wal-Mart's entry into India through a yet unspecified joint venture with Sunil Bharti Mittal signals the arrival of one of the world's most feared companies — the Microsoft of retailers — whose giant footprints, more than 6,000 of them across the world, have obliterated lakhs of small-time grocers and retailers in almost every line of business.

The corporation also inspires awe for its sheer size and marketing muscle which brings low-priced goods to the middle class and less privileged (say branded jeans at $10). It has created employment for lakhs across the world. In US, Wal-Mart has around 1.5 million employees, and is counted among the world's largest employers (a toss-up with Indian Railways).

If Wal-Mart was a country, it would rank within the world's top 25 economies, ahead of Saudi Arabia and Indonesia, and three times the size of Pakistan's economy. Its revenues from China are as much as that of neighboring New Delhi's trade with Beijing. Small wonder there are two opposing groups — one which respects Wal-Mart and another which despises it.

So, among the many books on Wal-Mart, here are two of the more recent ones: The Wal-Mart Effect: How the World's Most Powerful Company Really Works — and How It's Transforming the American Economy by Charles Fishman; and, How Wal-Mart is Destroying America and The World and What You Can Do About It by Bill Quinn

There are a score or more of other documentaries and books on Wal-Mart, not to speak of innumerable case studies. But more than four decades after Sam Walton started his first store in Arkansas, the world is yet to get a handle on the so-called "Bully of Bentonville" (its HQ in Arkansas) with opposition to it not just abroad but even within US.

So why is Wal-Mart so feared? Many critics believe Wal-Mart, with its massive size, deep pockets, and predatory prices, simply squeezes out neighborhood grocer, the so-called mom-and-pop stores, and small-time retailer, from the local optician to the hair salon to the hardware store. This is most evident in the US, where small family-owned businesses have withered in the shadow of Wal-Mart.

The other major criticisms against Wal-Mart in the US is that it underpays its employees, stocks too many foreign-made goods and undermines US manufacturing (70% of its inventory is said to be from China), discriminates against female employees, extracts too many concessions from local governments, and creates traffic and environmental problems (supporters say it also helps the local community).

So, how will Wal-Mart advance in India with the Bharti tie-up? Bentonville was guarded about the latest news.

"We are pleased to be in discussions with such a well-respected company that truly understands India's fast-growing retail market," a company spokesperson told TOI in an email on Monday. "But it is too early for us to comment further as we have just begun our relationship with Bharti."

India is not the first developing country market Wal-Mart has broken into. It now has over 50 stores in China. The jury is still out on its China venture, but over the last few years, Wal-Mart has withdrawn from Germany and South Korea, unable to beat local competition (it sold its German stores to Metro AG).

However, it has notched up notable success in the Latin American markets and in Canada. It is now the biggest private employer in Mexico and operates more than 780 stores in that country.

Wal-Mart critics are also watching the India move with interest. "It's not something that is going to impact our oversight of Wal-Mart in the US, but it will be interesting to see how it does in India," a spokesperson of the NGO WalmartWatch, which coordinates the public scrutiny of Wal-Mart's practices, told TOI.

Wal-Mart already has an office in Bangalore, from where it oversees its sourcing from India of goods worth nearly $1.5 billion. That's still only a tenth of its $15 billion plus purchase from China, where there are nearly 5000
regular suppliers. But now that Bentonville has signalled it will soon be in Bangalore and Baroda and Bhubaneswar with Bharti, expect to catch up soon with Beijing.

http://timesofindia.indiatimes.com/...e_Bully_of_Bentonville/articleshow/629902.cms

 

[solid snake]

I don't personally shop at Wal-Mart that often but I am unsure about what my position is on such corporations. I think that even though they will destroy many small time vendor's businesses, Wal-Mart creates far more jobs than were previously available. They pay taxes to the government, so that is another point in their favor. Their products are generally cheap, and since India is China's neighbor, price levels should be even cheaper there than in US Wal-Marts. A growing economy like India's needs mega-comapnies like this fueling consumerism and spending, so all in all, I think its a good development for India.

 

[Contrarian]

I don't personally shop at Wal-Mart that often but I am unsure about what my position is on such corporations. I think that even though they will destroy many small time vendor's businesses, Wal-Mart creates far more jobs than were previously available. They pay taxes to the government, so that is another point in their favor. Their products are generally cheap, and since India is China's neighbor, price levels should be even cheaper there than in US Wal-Marts. A growing economy like India's needs mega-comapnies like this fueling consumerism and spending, so all in all, I think its a good development for India.

I agree completely! Its a mixed judgement, but a significant one nonetheless. Overall its better for the nation i think. Far better than not having it. It creates soooo many jobs.

The added benifit is the govt's policy of not allowing it to operate indepednently. So Indian companies like Bharti also get a 50% share in revenue. I also read in some reports that they plan to invest more than Billion USD in India. This will also lead to more contracts for the suppliers in India. Wal-Mart contracts the suppliers for its needs. So they too will get added benifit. Had it been a 100% WalMart owned thing, i personally wont have supported it.