Handing Walmart a Big Whooping Defeat in India

ACORN International International

Best_Price_Walmart_India_BhartiYangon   Walmart with tail tucked firmly between their legs announced that they are unraveling their partnership with India’s giant Bharti conglomerate, acknowledging finally that this marriage of convenience while trying to enter the burgeoning India retail market and sneak around foreign direct investment requirements was finally coming to an end.  The India FDI Watch Campaign, a coalition of organizations from traders to hawkers to labor unions is an ACORN International partner that we helped found in 2005 and have supported throughout this accountability campaign to deal with Walmart’s attempt to enter India, welcomed the news with both relief and celebration.

            This is a victory with a hundred parents though, and no small part of the story is Walmart’s own undoing of course, and more recently its inability to either have its way with the Indian Parliament or to abide by the rules that were finally crafted in a bitter compromise to allow foreign direct investment in retail.  The fact that their mischief and chicanery in Mexico of bribing local officials and greasing every skid in that country is likely to have also been at work in India where an investigation continues into whether they were involved in corrupt practices tying the hands of their lobbyists even more.

            Only months ago we felt we were not exactly losing, but we were not really winning either.  After years of beating back the Prime Minister’s efforts to modify FDI in multi-brand retail, including a dramatic time in the monsoon session of 2011 when Parliament essentially was shut down for weeks in resistance to the Congress Party attempt to impose FDI, the compromise that had broken the stalemate with a study and recommendation committee where Dharmendra Kumar from India FDI Watch testified several times. At the end of last year and early in 2013 the compromise was clear and the fight was going to be moving to the individual Indian states to block the entry of superstores.  There had been important concessions won.  Walmart and their like could only open in cities with more than a million population and outside of city center areas.   They had to spend significantly on infrastructure as part of their investment and, importantly, they had to source at least 30% from India.

            From Walmart’s statements, as they gamely tried to frame the split with Bharti as part of its long term “patient” strategy for India, it seemed clear that the threshold objection that they might have had was actually the minimum 30% sourcing requirement from India’s factories and suppliers.   If that wasn’t the real issue, then some communications person or executive speaking to the Wall Street Journal has now been fired, and of course that’s the issue that means the most to the political and economic classes of India.  We had campaigned continually against Walmart’s entry, arguing that they would be dumping Chinese goods on the Indian market.  From their statements, while raising the white flag in India, it sounds like we were more right than we might have ever imagined.

            Walmart has 20 Sam’s Club type stores which have been allowed in recent years if they sell exclusively to other businesses and not walk-in customers at large.   Metro, the German retailer, with a big footprint in Indian cities now had been fast-and-loose with a similar wholesale operation and was fined in Bengaluru.  With this splitting the sheets with Bharti, that will basically be Walmart’s brand in India.

            At least until they learn to respect the issues of the 20,000,000 small retail purveyors in this country rather than think that fast bucks and loud bullying is this same as transparency and accountability.