What is Wal-Mart?

With around 5000 retail outlets worldwide, operating in more then a dozen countries and with over US$286 billion in annual sales, Wal-Mart is the top retail chain and number one fortune 500 company in the world. Wal-Mart is the top employer in the U.S. with 1.3 million employees, “the company accounts for 9 cents of every US retail dollar and sells around 20 per cent of the nation’s groceries and pharmaceuticals.” (Times News Network).

Wal-Mart’s sheer size gives it unrestrained economic power which allows it to drive down costs in the retail and manufacturing sectors and to enact its own standards with regards to its work force.

Facts about Wal-Mart and China

  • It is important to understand that there is a huge difference between the Chinese model and the Indian growth model, the Indian model is essentially domestic demand driven unlike the Chinese one that is fueled by export growth.
  • More than 70 per cent of the commodities sold in Wal-Mart are made in China.
  • Wal-Mart Stores Inc, says its inventory of stock produced in China is expected to hit US$18 billion this year, keeping the annual growth rate of over 20 per cent consistent over two years.
  • “If Wal-Mart were an individual economy, it would rank as China’s eighth-biggest trading partner, ahead of Russia, Australia and Canada,” Xu Jun, Wal-Mart China’s director of external affairs said.
  • Insiders point out that Wal-Mart’s imports from China have largely influenced the US trade deficit in China, which is expected to reach US$150 billion this year.
  • According to Larry Mishel of the Economic Policy Institute about Wal-Mart’s China policy, “A very conservative estimate could say that we (USA) have lost over a million jobs to China.”

How will Wal-Mart affect other Indian retailers?

In all of the countries Wal-Mart has set up shop it has put other retailers out of business and driven down wages.   Wal-Mart has a clearly defined anti-union policy aimed at preventing its work force from gaining any collective bargaining power which could result in increased wages, covered health benefits and job security. Many reports have been written documenting the economic and eventual social and environmental degradation which occurs when Wal-Mart “comes to town”.

“Over the course of [a few years after Wal-Mart entered a community], retailers’ sales of men’s’ and boys’ apparel dropped 44% on average, hardware sales fell by 31%, and lawn and garden sales fell by 26%. In towns without Wal-Marts that are close to towns with Wal-Marts, sales in general merchandise declined immediately after Wal-Mart stores opened. After ten years, sales declined by a cumulative 34%.”

[Kenneth Stone at Iowa State University, “Impact of the Wal-Mart Phenomenon on Rural Communities”].

Wal-Mart and India

•    Wal-Mart is seeking to open its own retail chain throughout India.

•  India’s $250 billion retail business is the eighth largest in the world and has the potential to grow 7 per cent by 2011. [McKinsey Report] For a company already dominating the world markets, this is an un-passable opportunity.

•    The owners of Wal-Mart stand to gain enormous profits from this move while India’s economy will suffer and its workers will be subjugated to the unfair work practices of this Multinational Behemoth.