US giant Walmart quits India after venture ends

[noname1]

If censoring is removed from China, what would the rank of China compared to other countries.

A good question. I understand the average cost in Beijing to get your child into a good school is 16000 in bribes.

 

[Chanakya's_Chant]

#Walmart will stick to India’s retail story, despite hurdles...

As far its relationship with India is concerned, make no mistake — Walmart will stick around. Indeed, in its statement announcing the split, Walmart has said that it will work with the government to create "conditions that enable FDI in multi-brand retail."

Consumer and market knowledge of a local partner will be crucial. Therefore the retailer may replicate in the country a strategy which proved to be successful in other emerging markets. A new JV partnership or an acquisition of a minority stake in a local player with an option to gain a majority stake later could be on the cards. Walmart has expanded in Mexico through a JV and through an acquisition of a minority stake in Japan and China. Walmart cannot give up on India because of the potential of its retail market. India is set to become the world's third-largest retail market by 2018, with food retail format sales accounting for $1,066,922 million, following China ($3,160,917 million) and the US ($1,442,146 million).

Despite its difficulties, Walmart has good prospects at least in the Indian cash-and-carry retail. This sector is fragmented and nascent at that. Walmart-Bharti opened its first BestPrice Modern Wholesale cash-and-carry outlet in 2009. It has since expanded to 20 stores, making it the second-largest in India.

For example Carrefour and Booker operate only a few stores while Reliance Retail has started to invest into this format only recently. Despite the limited competition, Walmart does not generate profit in India. Bharti Walmart's annual loss grew 34% to Rs 372.32 crore ($63.9 million) for the year ended December 31, 2012, from a year ago.

This was despite an 80% increase in its total revenue at Rs 3,381 crore against Rs 1,876 crore the previous year. The accumulated losses as of December 31, 2012, stood at Rs 1,137.7 crore. Yet, these are early days to wager a judgement. Many foreign retailers operating in emerging markets need up to 10 years to break even. Though front-end retail looks a long term goal, exit from a lucrative market like India would not be smart.

Walmart should stick to its cashand-carry format for now. Due to the absence of structured wholesale networks, especially outside large cities, India offers a great potential for its Best Price Modern Wholesale stores. No one these days can afford to ignore India. Not even the world's biggest retailer.

But at the same time let me tell you, FDI rules in India weren't the only reason. Walmart has been facing a decline in like-for-like sales (a comparison of a year's sales to the previous year's sales of a company in its home market), closed several stores in China and has still to complete introduction of EDLP pricing (promise of the lowest available price) strategy in Latin America. With the deteriorating outlook for generated profits, the retailer had to set priorities and revise its international expansion plans.

 

[Hafizzz]

Who did Wal-Mart in?
Who did Wal-Mart in? - Livemint

It is interesting that India’s Enforcement Directorate, the agency that looks into foreign exchange violations, has said Wal-Mart Stores Inc. and its erstwhile Indian partner Bharti Enterprises Ltd didn’t break any laws when the former invested (through convertible debentures) in Cedar Support Services Ltd, the latter’s subsidiary that was also the holding company for Bharti Retail Ltd, which ran a chain of supermarkets.
The disclosure, which was made, not through an official announcement but through leaks to the media, comes just around 10 days after the two companies announced they were breaking their partnership, Bharti Wal-Mart, that runs a chain of wholesale or cash-and-carry stores in India, and that Bharti Enterprises was buying back the debentures Wal-Mart held in Cedar.
Bharti Retail has said it will expand its retail presence, as Mint reported on 10 October.
Wal-Mart has said it will expand the wholesale business and also work with the Indian government on creating what it terms a more “conducive” investment for multi-brand retail (or supermarkets and the like).
As the Mint story pointed out, there is buzz that Wal-Mart could either be looking for a new partner or downsizing its India presence.
Some analysts see the Enforcement Directorate’s move to clear Wal-Mart as something that will reassure not just the American retailer but also other foreign investors.
Still, a post-mortem of the breach in rules that never was is warranted—if only to understand how things work (or don’t) in India.
The Wal-Mart, Bharti joint venture was formed in 2007.
Soon after, Wal-Mart also started running EasyDay supermarkets and stores, although, at the time, Indian law didn’t allow foreign investment in multi-brand retail.
Around the same time, Wal-Mart invested $100 million in Cedar.
Indian law, at the time, wasn’t explicit on whether such investments in holding companies, especially if made through convertible debentures, amounted to foreign direct investment in their subsidiaries (if it did, it would have meant that Wal-Mart had an investment in Bharti Retail, which wasn’t allowed).
To be sure, India’s commerce ministry did, through a press note, seek to clarify that such investments were not tantamount to foreign direct investment (FDI), but, strangely, this press note was not notified, which meant that its status was unclear.
Meanwhile, some politicians and reporters, likely fed the report by Bharti’s corporate rivals (Mint too received the papers), raised the issue.
The commerce ministry couldn’t do anything because of the press note that wasn’t yet a rule. Nor could the Reserve Bank of India.
The two bounced around the issue before passing it on to the Enforcement Directorate. Both Bharti and Wal-Mart have always maintained that their investments were legal at the time they were made.
Meanwhile, in September 2012, India allowed FDI of up to 51% in supermarkets.
By then, Wal-Mart’s Indian operations had other problems and the company’s joint venture with Bharti was also fraying, partly because the Mittals who run Bharti were not happy with Wal-Mart’s bureaucratic methods, especially given the pace at which they had scaled up their telecom business, Bharti Airtel Ltd.
Now, it emerges that the Enforcement Directorate believes there was no violation of India’s foreign investment rules by Wal-Mart when it invested in Cedar.
So, in many ways, the story that was ended up being a story that wasn’t.
Then, as any good reporter will maintain, that’s a story in itself.