Wal-Mart Takes on the World

by Mark Friedman  on Monday, Dec. 12, 2011 12:00 am  

When Wal-Mart enters a market, the debate over whether the retailer is good for local business invariably arises, Vijay Prashad, a professor of international studies at Trinity College at Hartford, Conn., told Arkansas Business last week. He has studied Wal-Mart extensively.

The question of its impact on small businesses was raised, Prashad said, even when Wal-Mart tiptoed into the international market in 1991 by entering into a joint venture with Cifra S.A. de C.V. to open a Sam’s Club in Mexico City.

He said the debate recently played out in India as the parliament there was split over allowing Wal-Mart and other big-box retailers into the country. One faction of Indian leaders thought that “if you allow corporations from outside to come into India, they will bring technology and methods of doing business,” said Prashad.

Others thought that allowing Wal-Mart into the country would destroy the mom-and-pop businesses, he said.

It is unclear when — or if — India will change its mind and allow Wal-Mart to open stores inside the country, Prashad said.

India was one of the places Wal-Mart was banking on for explosive growth.

“If you look at China and India, they represent probably two of the very few countries in the world where there is a chance in the future to end with more stores in those countries than we have here in our home market,” Scott Price, CEO and president of Wal-Mart Asia, said during the October meeting for analysts.

The rest of the world altogether has more Wal-Mart stores than the United States. As of Oct. 31, Wal-Mart had 3,850 stores domestically and 5,366 internationally.

But the key to Wal-Mart’s growth is the projected growth of the middle class internationally, McMillon said in October.

For the 10-year period that ends in 2020, China is projected to add 189 million middle-income households, and 54 million will be added in India, giving them about the same middle-class population as North America, he said.

“It’s an incredible number,” McMillon said. “And that has an impact on what we do.”

Wal-Mart is already involved in a massive rollout of stores in China. Between Jan. 1 and Oct. 12, it opened 24 stores in China and was on pace to open 56 more by the end of the year, Price said.

 

 

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