In March, 2002, Sprawl-Busters reported that Wal-Mart had purchased a 6.1% share in the Japanese retailer Seiyu, with an option at the time to increase its control to 66.7%. Roughly two years later, Wal-Mart opened up its first supercenter in Japan, increased its share of Seiyu to 42%, and expressed strong interest in buying shares in a second Japanese company, Daiei. But sales at Seiyu have shortened Wal-Mart’s kimono. In July, 2005, we reported that Seiyu sales for the year was projected to show a $65 million loss. This week, Wal-Mart announced that it is increasing its investment in Seiyu to more than 50%, and will turn the Japanese company into a subsidiary of Wal-Mart, which will purchase $597 million worth of the shares of the Tokyo-based retailer. Seiyu operates more than 400 stores here. Seiyu shareholders must vote on the offer this December. The company’s books look even worse now than earlier in the year. The Associated Press reports that the company forecasts a loss of $94 million in the first half of the year — four times larger than the previous period last year. Wal-Mart’s head of the International division, which now accounts for more than 20% of Wal-Mart’s revenues, said the Seiyu investment was “intended to give Seiyu increased financial stability and continue strengthening Wal-Mart’s presence in the second largest retail market in the world.” Seiyu’s CEO said he looked forward to becoming “a full member of the Wal-Mart family.”
So far, Japanese consumers seem to be somewhat reluctant to become full members of the Wal-Mart family, and the jury is still out on how the Japanese will respond to this latest move by American retail colonialism. In places like Japan and Germany, Wal-Mart has not grafted on as well as expected. But Wal-Mart is moving aggressively into Japan, Central America, and soon, to one of the largest poverty markets in the world, India. This week Sprawl-Busters had its first call from an Indian media outlet — so the push is on.
