The future of Wal-Mart lies in its international division. While expanding new stores in many U.S. communities has become an unpleasant tug of war for the retailer, the sky is the limit in the vast market regions of China and India. Wal-Mart is already voraciously racing through China, but so far, India has not been fertile ground. But Prime Minister Manmohan Singh is about to make one of the biggest economic mistakes in the history of his impoverished nation. News reports say Singh will soon permit FDI (foreign direct investment) in the retail sector. “There are many fears, particularly among small traders and small shopkeepers, but I believe we can soon move forward,” Singh told the Financial Times this week. Singh said he hoped to change the law this year. Just several days before this remark, the Prime Minister had met with John Menzer, the head of Wal-Mart’s international division. After that meeting, a goverment official was quoted as saying, “Wal-Mart will happen.” The official predicted that the Indian cabinet would lift the foreign direct investment ban before the Prime Minister meets with President George W. Bush in July.
India is estimated to have a $180 billion retail market. It’s retail economy is still dominated by small, family-owned businesses.
Mohamatas Ghandi would be turning in his grave if he saw the coming destruction of the small, family business economy of India, wasted by a U.S. colonial retailer. Wal-Mart represents a threat more profound than English occupation, because the English never changed India’s trade economy the way Wal-Mart will. As Wal-Marts open in India, the Prime Minister will watch as his small business class is decimated. Those families, and their offspring, will have to put on a Wal-Mart vest and work as clerks and baggers for plantation wages if they want to go into the retail sector. If Wal-Mart plans another 4,000 supercenters for America, just imagine what the countryside in India will look like. A whole host of American retailers can flock behind them, creating a rich market for the U.S. firms to mine.
