Our newest export to India: Walmart
Our newest export to India: Walmart
Date: Tuesday, September 15, 2009 2:58 AM
<<<<< JOB DESTRUCTION NEWSLETTER No. 2053 -- 9/15/2009 >>>>>
Finally the U.S. is exporting something to India besides jobs. We can no
longer say that trade and immigration with India is a one way deal. Our
export: WALMART!
Now Indians can buy "made in China" just like Americans.
This isn't just any Walmart however. For one thing it's not called Walmart
-- it's called Best Price Modern Wholesale. The name change was necessitated
by India's protectionist trade policies which mandate that retail stores must
be at least 49% domestically owned. Walmart partnered with the Indian company
Bharti Enterprises in order to comply with India's laws. Some companies like
Ikea are turned off from doing business in India because of the restrictive
rules -- but not the charge-ahead CEOs at Walmart!
India's rationale for this protectionism is that they want to preserve the
livelihoods of the small family owned stores from the onslaught of foreign
owned big box retailers. Protecting small domestic businesses (like the guys
who pull their own wooden carts) might seem quite Byzantine by the standards
held by free trade ideologues in the U.S., but in India protectionist
attitudes are politically popular. It's interesting to note that India is
still complaining to the WTO that the U.S. and the E.U. are too restrictive on
free trade and immigration.
Foreign companies give up a lot of control when they submit to India's laws,
but some are salivating so much over the prospect of selling to India's hoards
of consumers that they are willing to overlook the disadvantages of partnering
with Indian companies. A lot of the excitement is being generated by the
presumption that large numbers of Indian computer/IT workers have money to
burn. Indians are now earning average annual incomes of about $620, but the
growing middle class in India earns anywhere between $4,500 and $22,000.
Walmart and other American retailers have their sights set on grabbing some of
the expendable money from Indian consumers, but there are some problems to
solve besides the low incomes: Indians tend to save a larger percentage of
their income than Americans. It may take awhile to get Indians acquainted with
American style consumerism that is driven by buying on credit. Ms. Chowdhary,
a 25 year old single female that lives with her parents has the attitude that
the Walmart's of the world are hoping to foster in India:
"Right now, I don't have to save," says Ms. Chowdhary, dressed in
jeans and a black leather jacket. "I can spend."
REFERENCES:
http://www.time.com/time/world/article/0,8599,1915353,00.html
A Visit to India's First Walmart (a.k.a. Best Price)
http://marketplace.publicradio.org/display/web/2009/07/13/pm_pajab/
Wal-Mart brings its 'Best Price' to India (podcast is on website)
http://www.indianembassy.org/newsite/News/US%20Media/2006/14.asp
Wallets Crack Open in India; Foreign Retailers Salivate As Tech Workers Spur
Consumer Boom
http://www.thehindubusinessline.com/2009/06/13/stories/2009061350900500.htm
Concern over foreign retailers dropping India plans
http://economictimes.indiatimes.com/articleshow/4984215.cms
'We are more resolute in difficult times to get to a conclusion'
European Union's Trade Commissioner Catherine Ashton is of the view that
negotiations in the coming months will be crucial for the success of the Doha
round of WTO negotiations.
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.time.com/time/world/article/0,8599,1915353,00.html
Sunday, Aug. 09, 2009
A Visit to India's First Walmart (a.k.a. Best Price) By Madhur Singh /
Amritsar
Amritsar lives in many centuries at once. This holiest city of the Sikhs is
home to their most revered shrine, the mystical and awe-inspiring Golden
Temple, where nihangs -- members of an armed Sikh order -- live on in
traditions dating back centuries, sporting distinctive electric-blue tunics
and a panoply of weapons, even speaking a unique martial dialect of the
Punjabi language. Other parts of this prosperous merchant city wear Levis,
hang out at cafis, follow the latest diet fad or carry the latest iPod.
And since May this year, Amritsar has also been home to India's first Walmart.
Located on the Grand Trunk Road, the subcontinent's lifeline dating back to
the 16th century, the store is a good half-hour's drive out of the city but
has been attracting a steady, if small, stream of customers and wide-eyed
spectators since its launch on May 30. At 50,000 sq. ft. (about 4,600 sq m),
it is almost tiny by U.S. standards, and there are fewer than 50 vehicles in
the parking lot outside -- mostly passenger cars, with a handful of small
commercial vehicles, SUVs and some motorbikes. A blue-turbaned, elderly Sikh
with a flowing white beard kick-starts his scooter while balancing a small
knapsack of shopping on the seat behind him. (Read about Walmart's big plans
for getting even bigger.)
It is a very different Walmart; in fact, it's not a Walmart at all. It is
called Best Price Modern Wholesale, in collaboration with Walmart's Indian
partner Bharti Enterprises, in order to get around the country's rigid
foreign-investment restrictions. Members of the store have to be in business
in order to do transactions in wholesale, but their families get cards that
allow them to buy at retail prices. All sales are in cash. (Read how Walmart
overcame India's tough business restrictions.)
One advantage of being in Amritsar is that almost everyone in the business-
oriented town is a merchant. Furthermore, the cash-and-carry format allows
Bharti and Walmart to co-opt a part of the competition -- the mom-and-pop, or
kiryana, stores -- by turning them into customers. In fact, there's a section
within the Best Price store called a "model store," where kiryana shop owners
are taught how to arrange goods in their store and optimize inventories to
maximize profits.
One of the regulars at Best Price is Rohit Kalia, 29, a restaurateur, who is
filling an already overflowing trolley with a 5-kg pack of paneer -- the
Indian vegetarian's favorite cottage cheese -- and 12 tins of baby corn.
Kalia says he visits every second day for supplies since he gets many things
cheaper here. "This store has certainly expanded my range of choice," he says.
"But it's just one more store where I buy supplies from.
I still get better prices and more convenience shopping at my usual
suppliers." He is cut short by a commotion -- the appearance of a forklift has
created a stir. Children are gazing, enchanted, while adults look on with
barely concealed curiosity. The store staff quickly rush in to cordon off the
aisles that are being restocked, and gradually it's back to business as usual.
It may take a while, however, to persuade the locals to change their shopping
habits. "I'll come here only once in a while," says Dalvinderjit Kaur, a
housewife, whose son is filling out a form to get membership at Best Price. "I
have shopped at the same kiryana shop for 18 years." There are many reasons
customers like Kaur prefer their kiryana shops: they deliver for free, even
for small orders; they allow regular customers credit; and they are close by
and personal. "He knows us so well," she says. "When my daughter went to
America to study, he called to ask, 'Madam, is your daughter not home? You
haven't been ordering cheese singles!' If I run out of shampoo or detergent, I
can just phone him, and he'll send a boy with the stuff, free of charge."
Best Price has tried to match this, but customers have to pay for home
delivery. It has also linked up with Kotak Mahindra Bank to offer "business
cards" with which customers can shop on credit for 14 days. Kalia, the
restaurateur, laughs at this: "In a country where half the economy is a black
economy, how do they expect a shopkeeper to give checks and put all
transactions on record?"
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://marketplace.publicradio.org/display/web/2009/07/13/pm_pajab/
Monday, July 13, 2009
Listen to the show
Wal-Mart brings its 'Best Price' to India An Indian Sikh Wal-Mart employee
The American superstore just opened its doors in Northern India, under the
name 'Best Price Modern Wholesale.' Its arrival signals the retail giant's
effort to cash in on one of the world's fastest-emerging consumer markets.
Raymond Thibodeaux reports.
An Indian Sikh worker cleans a section of cups inside the country's first ever
Bharti Wal-Mart 'Best Price' Modern Wholesale cash and carry store.
(Narinder Nanu/Getty Images)
KAI RYSSDAL: As Jeremy Hobson was telling us earlier, here in the states Wal-
Mart's fellow retailers are worried about what the company might do on health
care. Elsewhere in the world they're just plain worried about Wal-Mart. A
couple of weeks ago the first Wal-Mart opened in India, the world's second-
largest consumer market. But big boxes are going to take some getting used to.
Raymond Thibodeaux reports from the northern India city of Amritsar.
Raymond Thibodeaux: This is the home electronics section of India's first Wal-
Mart. You won't see the familiar white letters on a navy background anywhere.
Here, the store is called Best Price Modern Wholesale. Not quite as snappy as
Wal-Mart, but at these prices, who cares?
B.D. GOUR: People are getting attracted to this. The pricing is good, the
commodities and the quality is fantastic.
That's B.D. Gour, general manager for a local paper company and an
enthusiastic customer. He's been here three times since the store launched
just weeks ago.
GOUR: The first two days when I came, it was a houseful. People were
stopped outside. It was a fantastic site to see.
Big-box stores, with everything under one roof and rock bottom prices, are new
to India. Most people shop at neighborhood kiosks, buying tiny packets of
shampoo or laundry detergent. And as the name implies, Best Price Modern
Wholesale isn't officially geared toward the general public.
Economics professor Paramjit Kaur Dhindsa fears the average Indian shopper
won't benefit, just the store owners.
Paramjit Kaur Dhindsa: They may increase their sales, they may earn a
profit, but how all these benefits are going to be percolated to the
downtrodden? That's more important, and that's a real cause for concern.
For years politicians, activists and small retailers have resisted big-box
stores. Now, the stores seem to be catching on. Some shoppers say Best Price
isn't too strict in checking who's a wholesaler and who's not. And certainly
the shoppers perusing the aisles of flat-screen TVs and 50-pound sacks of
chickpeas don't all look like business people.
About a 10-minute drive from Best Price, Amritsar's main street bazaar is hot,
crowded and messy. Many smaller wholesalers and street merchants here don't
have Wal-Mart's knack for squeezing efficiencies out of suppliers.
They worry they'll be squeezed. Some here say sales have dropped 20 percent
since Best Price opened.
Raj Jain, president of Wal-Mart India, says in a country of more than 1.2
billion people, there's enough business to go around.
RAJ JAIN: It will always be a combination of big boxes, which are outside
the town and offer significant value. But it'll also be a lot of convenience-
related shopping which will happen within 10 to 15 minutes walking distance of
people's homes. I think it'll be a combination of both.
Wal-Mart is in a joint venture with Indian retailer Bharti Enterprises.
India wants to protect domestic companies from direct foreign competition.
So the law requires that stores selling multiple brands must be majority owned
by an Indian firm.
Analysts say Wal-Mart's now paved the way for other foreign mass merchandisers
to enter India's nearly $380 billion-a-year retail market.
Britain's Tesco and France's Carrefour are in talks with potential Indian
partners.
In Amritsar, I'm Raymond Thibodeaux for Marketplace.
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.indianembassy.org/newsite/News/US%20Media/2006/14.asp
September 15, 2009
Wallets Crack Open in India; Foreign Retailers Salivate As Tech Workers Spur
Consumer Boom Wall Street Journal, Tuesday, January 3, 2006
By PETER WONACOTT
NEW DELHI -- India has long beckoned as the next big market -- and for just as
long, has dashed such hopes. But the prediction may finally come true in 2006,
thanks to the Indian consumer.
A decade ago, buying a motor scooter in India could take years and a stack of
paperwork. These days, companies and banks court the consumer through instant
mobile-phone messages. A buyer can plunk down just $22 and come away with a
scooter on credit. Sales of two-wheelers -- a hallmark of India's emerging
middle class -- jumped 16% in the year ended March 31.
The sales are the latest example of why global executives are paying more
attention to India, after decades of relative neglect. The nation's deep
pockets of computer programmers have spawned deep-pocketed urban consumers,
now at the core of the consumer boom. Many younger Indians are more confident
than their parents about the country's economic direction, say executives, and
are more willing to buy expensive foreign brands.
"There is a sense of a brighter future," says Nandan M. Nilekani, chief
executive of Infosys Technologies Ltd., India's second-biggest outsourcing
company. People are "loosening up their purse strings."
Unlike consumers in another emerging Asian giant, China, Indians appear more
inclined to spend than save. One telling indicator is that India's gross
national savings rate, or how much people earn over what they spend, is 26%.
Although that is high compared with what Americans save, it is low relative to
other Asian countries and about half China's rate. This trend has raised hopes
that India will play a bigger role in stoking global demand, joining Japanese
and Europeans in shifting the burden from the American consumer.
Despite the bright prospects, many foreign companies are still struggling to
connect with the Indian consumer. City malls offer a blur of brands, from fast
food to fashion. Yet the world's biggest foreign retailers, such as U.S.-based
Wal-Mart Stores Inc. and France's Carrefour SA, have been prevented from
investing in and operating their own stores. Many of the foreign brands now
have entered India through franchise agreements, which require companies to
cede a lot of control to local operators.
Indian officials say they are studying proposals of how to open the retail
sector to foreign investment without putting many of the million or so mom-
and-pop shops out of business. Other sectors that authorities have opened to
greater foreign participation, such as telecommunications and banking, are
seeing a surge in consumer demand.
Text Box: With average annual income still hovering around $620, Indians also
remain constrained in what they can buy -- even if purchasing power is growing
quickly. Few foreign companies have hit upon profitable formulas for both
India's massive countryside and its wealthier cities.
Among those trying: PepsiCo Inc.'s Indian subsidiary, which has invested about
$1 billion in its snack, beverage and bottling business since arriving in
India more than a decade ago. Pepsi has long sold its cola in small, reusable
glass bottles for about 20 U.S. cents apiece, but it is shifting more emphasis
to premium products: juices, bottled water and Diet Pepsi in clear plastic
bottles. In cosmopolitan Mumbai, almost half of the company's drink sales now
come from restaurants -- a sign of traction among free-spending urbanites.
"Is the future now?" says Rajeev Bakshi, PepiCo's India chief. "It's getting
there."
Indeed, India's consumer boom goes beyond soda pop and scooters. Auto sales
climbed 18% in the year ended March 31. Production of microwave ovens jumped
27% amid surging demand for kitchen conveniences. India is also adding more
than two million new mobile-phone subscribers every month, making it the
fastest-growing telecommunications market in the world.
Declining import tariffs and rising salaries have helped to spur sales, but so
has an influx of companies reaching out to all ends of the market.
BMW AG said last month it will establish a production and sales unit in India,
offering its 3-series and 5-series for the local market. Motorola Inc. has
announced it is rolling out three new products, including a handset priced
under $40, assembled in India. (Please see related article on page 38.) South
Korea's LG Electronics Inc., which makes televisions, washing machines and air
conditioners among other home appliances, has said it aims for $10 billion in
revenue from India by 2010, about five times current levels.
Such plans reflect how quickly India's middle class is growing, and how price-
sensitive shoppers are likely to remain. India currently has about 17 million
households -- or 90 million people -- that belong to the country's middle
class, but earnings range between $4,500 and $22,000, according to the
National Council for Applied Economic Research. The New Delhi think tank
classifies an additional 287 million people as "aspirers," or those that hope
to join the middle class. Their household income is between $2,000 and $4,500.
By 2010, these two groups combined will number 561 million people, predicts
the economic council.
The widening of India's middle class has a lot to do with the nation's hot
information-technology industry. The industry is expected to employ nine
million relatively young workers in the next five years, almost triple current
levels, according to a study from McKinsey & Co. and the National Association
of Software and Services Companies, an Indian software lobby group. If you add
in families, the study estimates that 90 million people will be riding the
industry's growth by 2010. In powering the nation's exports and rising wealth,
the study predicts, India's IT sector will play a role similar to that of
autos in Japan, luxury goods in France and microchips in Taiwan.
A lot of the new money is beginning to show up at the mall.
The immediate beneficiaries of the consumer boom have been India's ubiquitous
celebrity endorsers. Outside the Metropolitan mall complex near New Delhi,
Bollywood megastar Amitabh Bachchan appears on a giant video screen, touting
one of his 14 products. He hawks Cadbury chocolates, Eveready batteries,
Parker Pens and Pepsi. The 64-year-old Mr. Bachchan, whose white goatee stands
in blinding contrast to his chestnut-colored tresses, also endorses digestive
pills and hair oil.
Inside the four-story Metropolitan shopping complex, Shruti Chowdhary spends
her morning off from an outsourcing company loading up on new clothes --
Reebok tennis shoes for herself and black blazer from United Colors of
Benetton for her brother. Ms. Chowdhary -- 25 years old, single and living
with her parents -- estimates that 70% of her monthly salary goes to shopping.
"Right now, I don't have to save," says Ms. Chowdhary, dressed in jeans and a
black leather jacket. "I can spend."
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.thehindubusinessline.com/2009/06/13/stories/2009061350900500.htm
Saturday, Jun 13, 2009
Concern over foreign retailers dropping India plans
"Foreign players are keen on more control than what they are currently
offered. At this juncture, the retail sector has to be supported by Government
initiatives and not otherwise."
Bindu D. Menon
New Delhi, June 12
With Ikea dropping its India plans and a Parliamentary Standing Committee
report opposing the entry of heavyweights into the retail trade, Indian
retailers looking for foreign tie-ups are in a cautious mood.
Faced with the double-edged sword of slowdown and Government policies
restricting stake dilution, retailers and market analysts observe that foreign
inflow and technical know-how, crucial to the business, could be hampered, if
the Government does not act proactively soon.
"It is not a zero-sum game. Indian retail needs a lot of funds to establish
itself. Foreign players are keen on more control than what they are currently
offered. At this juncture, the retail sector has to be supported by Government
initiatives and not otherwise," industry sources said.
The Parliament Standing Committee on Commerce in its report Foreign and
Domestic Investment in Retail Sector , too, has demanded a blanket ban on
domestic corporate heavyweights and foreign retailers from entering retail
trade in areas such as grocery, fruits and vegetables. It also sought
restrictions on their opening large malls to sell other consumer products.
An Ikea official was quoted as saying, "We would have liked the government to
allow 100 per cent FDI in retail. As it was not in the offing, we shelved our
India plans."
A senior industry expert says there are many misconceptions about retail.
It is not clear whether parties are opposing foreign direct investment or
modern trade itself. FDI is essential as it will bring liquidity and
infrastructure into the system, he believes.
Slowing sales
A recent KPMG report also points out that the slowdown has affected sales.
"Slowing sales resulting in lower inventory turnover and increasing working
capital requirements to fuel growth have resulted in liquidity pressures for
many domestic retailers.
"Companies have been trying to reduce the inventory and shorten working
capital cycles," said Mr Ramesh Srinivas, National Industry Director
Consumer Markets, KPMG in India.
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://economictimes.indiatimes.com/articleshow/4984215.cms
'We are more resolute in difficult times to get to a conclusion'
8 Sep 2009, 0120 hrs IST, G Ganapathy Subramaniam, ET Now European Union's
Trade Commissioner Catherine Ashton is of the view that negotiations in the
coming months will be crucial for the success of the Doha round of WTO
negotiations.
In an exclusive interview after the two-day conclave of trade ministers in New
Delhi, she is eager that EU enter into a free trade agreement with India at
the earliest. Excerpts:
Has the informal ministerial at Delhi re-energised the Doha round of
negotiations?
I think it has and it is a great tribute to minister Anand Sharma for bringing
together many ministers from across the world. All of us came with the
intention of trying, over those two days, to work through some of the pending
issues in informal ways. And, in strategic ways too. The talks have been
successful in giving us new energy to move forward on Doha.
Last summer many ministers felt that we were on the verge of a Doha deal, but
that did not happen. Has the situation undergone any dramatic change now?
One of the things that has changed dramatically is the economic situation we
are all in. When talks broke down last year, it was before the economic crisis
or recession that hit many countries. So in a sense, the situation, the
backdrop, is different. Does that take us closer to resolution? I think it
makes us more resolute in trying to get to a conclusion. Because, at the end
of the day, this round would be significant in helping trade flow more freely
across the world.
What would be a reasonable time-frame to expect Doha talks to conclude?
We talked a lot about 2010. Of course, some ministers have recently said that
we need to be cautious on coming down to absolute time-frames.
However, it is my view that if we put the energy that we said we will over the
next few months in discussions between officials and between ministers, we
need to consider the possibility that we will complete this round soon in
terms of all modalities on the major pieces of work.
Can we expect comprehensive negotiations in the months to come, covering all
important aspects including agriculture services and NAMA?
Yes. For many countries, agriculture and non-agriculture market access
(NAMA) are deeply significant. Other issues like trade facilitation, rules and
issues around services follow a bit later. One of the questions that we were
addressing informally is: How would the final agreement look like?
This is necessary to get a clear vision of the end game.
We should engage in discussions on the 'other' issues. In fact, some
discussions have already taken place at a technical level and indeed
conferences of ministers. There is a general recognition now that we, in
parallel, should try and have these discussions (on 'other' issues) so that
countries can see better what the implications will be.
So WTO members are firm on the single undertaking plan?
Of course, nothing is done until everything is done. That's still at the heart
of what we would have to do. But being clear about what the end might look
like helps all of us in terms of domestic audiences. Apart from dealing with
each other, we have to make sure that people in our own countries understand
and appreciate what it means for them.
What is the progress on the trade pact between EU and India?
We have been through some rounds of negotiations with India, which is
significant. We still have some way to go. We have got to give Mr Sharma some
time to be able to speed up everything. He and I will be meeting later to
discuss the FTA. I am very confident that there is again energy between the EU
and India to try and get to the end of our discussion at the earliest.
When will the FTA be upgraded to include services and investment?
We want to cover as broad and wide a group of issues as we possibly can
issues that are of importance to India and issues that are of importance to
EU. How it will eventually shape down will depend in part on what India is
interested in developing for the South (developing countries), what India
wants to do in terms of opinion formation. It is hard to firm up parameters at
this stage and I am keen that we are as open as when we started out.
Will the EU liberalise the visa regime for Indian professionals and business
people?
This is an important issue for India and we are going to look at it very
carefully. I have not yet had discussions with all of my member-states on
this, but I am very aware of the significance of this and we will be looking
at it very carefully.
What is the status of EU s dispute with India over taxes on wines and spirits?
I would like to see mutual resolution. We are in discussion to do that. It is
obviously my preferred way of going forward. And we are making some progress.
What is the EU doing to preserve the development character of the Doha round?
The Doha round is a development round and that is how it began in 2001, and
the significance of the economic turmoil for many developing countries cannot
be underestimated. So it is important, fundamental and core part of what we
are trying to do. I hope as a consequence of what Mr Sharma did and the Indian
government is doing, we now have a clearer understanding of this being the
core of what we do in sorting out this round.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - Newsletter Homepage:
http://www.JobDestruction.com/shameh1b/JobDestructionNews.htm
Support this Newsletter and www.JobDestruction.com by donating:
www.zazona.com/Donations.htm
To Be removed from this mailing list, reply to this email with UNSUbSCRIBE in
the subject window
Back to archives