Posted on 08/06/2007 11:56:02 PM PDT by 2ndDivisionVet
MUMBAI - Wal-Mart on Monday announced a long-planned venture to jointly build wholesale outlets in India and a nationwide supply chain with local partner Bharti Enterprises.
The Bentonville, Ark.-based retail giant’s attempt to enter India’s highly protected retail sector has sparked howls of protest from leftist politicians and small-scale retailers, who fear the impact of competition on the country’s 12 million mom and pop shops, which hold 97% of the market.
The companies are establishing a joint venture called Bharti Wal-Mart that will open a chain of wholesale cash-and-carry outlets to supply Indian retailers, in line with government regulations, Bharti said in a statement.
The world’s largest retailer will also give back-end support to a chain of retail stores that Bharti will set up through a subsidiary, Bharti Retail.
The companies signed an initial agreement in November that has received plenty of political scrutiny.
Single-brand retailers are only allowed to own up to 51% of Indian companies; multi-brand retailers like Wal-Mart are barred from opening their own stores in the country.
Bharti Wal-Mart’s first wholesale cash-and-carry store is likely to open by the end of next year. Over the next seven years, the venture is expected to open 10 to 15 such stores and employ about 5,000 people.
The wholesale outlets will be 50,000 to 100,000 square feet in size, and sell groceries, fresh produce, stationery, footwear, clothing, consumer durable goods and other general merchandise, Wal-Mart said.
Bharti had earlier said it would spend $2.5 billion over the next eight years to set up supermarkets, hypermarkets and small retail chains in cities with a population of over a million.
Wal-Mart’s global expertise in logistics will improve retail efficiencies in India, said Bharti CEO Sunil Mittal. Around a third of India’s agricultural produce goes to waste every year because of the lack of proper storage and sourcing networks across the country.
Wal-Mart’s international success is based on local sourcing, and it will follow the same pattern in its wholesale venture, said Raj Jain, country president for Wal-Mart’s India operations. It sourced goods worth $600 million from Indian suppliers last year.
The companies didn’t disclose the financial details of the venture. Bharti also has a joint venture, FieldFresh, with a unit of British finance group Rothschild to export fresh produce.
India’s retail market, estimated to be worth about $300 billion a year, is growing at about 20% annually, and Wal-Mart has a first-mover advantage among the foreign retailers eyeing the country. Carrefour and Tesco (nasdaq: TESO - news - people ) were in talks with Indian businesses, but concerns over government restrictions remain.
But foreign competition isn’t all Wal-Mart has to worry about. Indian giants like Reliance Industries, the Tatas and the country’s largest retailer, Pantaloon, are also aggressively expanding their chains across cities, and they have the advantage of brand recognition in India.
A group of small shopkeepers, traders and unions called the Movement to Save Trade Livelihoods said it would hold nationwide protests against the deal Thursday. They accused Wal-Mart and Bharti of circumventing existing laws to enable the U.S. company’s “backdoor entry,” saying retail chains would deprive millions of small-scale business owners of their livelihoods.
Wal-Mart (nyse: WMT - news - people ) garners 20% of its annual sales from overseas markets, but after abandoning operations in Germany and South Korea, the company could use another overseas success story. India is the largest market it has entered in around a decade. (See: “ A Whole New Wal-Mart”).
from what I am hearing and reading, India has a very fast growing middle class....
You can’t stop the mart....ha. If they can get that market, they’re a government in themselves. Would be interesting to have bought mart when it was first offered. Talk about being rich.
have you ever been to India ?
a Walmart there? hahahahahaha
they would have to leave an open field next to it to host the latrine needs....
Onward march. Give em hell Wally.
Good. Now we can begin trade with India and ween ourselves from china as a supplier
Abu, be afraid, be very afraid. They are coming after the Quickie Mart!!!!!
The ethic in India is way different than in other capitalistic societies. Indians believe in full employment even if extremely menial. Killing mom and pop shops will get Wal-Mart in India boycotted like crazy.
In order for there to be a lot of “made in India” seen in the USA, there would have to be a lot of factories. India has a bit of catch-up to do there....
Or better yet, move manufacturing from communist China back to the United States....
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