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Home--News
Wal-Mart Getting Ready to Enter India
By Parija Bhatnagar
CNN/Money staff writer
June 6, 2005
No. 1 retailer sings nation's praises to analysts; calls market
a 'huge organic growth opportunity.'
New York - Has Wal-Mart tapped India, the second most-populous and
fourth largest retail market in the world, to some day become the
jewel of its corporate crown?
Maybe, or at least that's the impression John Menzer gave last week
when the president and CEO of Wal-Mart's international operations
dedicated a substantial portion of his presentation to analysts talking
exclusively about his recent trip to India -- charts and photos included.
It's interesting to note that besides India, Menzer also made pit
stops to China and Korea, but those two countries only received a
cursory mention during his 30-minute speech as part of Wal-Mart's
annual meeting with shareholders and analysts.
Menzer's heavy pitch of India came soon after he headed a delegation
to the subcontinent last month, which also marked the first Wal-Mart
(Research) executive visit to the country.
Said Menzer, "India represents a $250 billion retail market, growing
7.2 percent a year, but modern retailing is just starting to emerge
This shows us that India is a huge organic growth opportunity for
Wal-Mart."
But it's not without some challenges, Menzer added, noting that the
supply chain was still very weak in India.
Menzer's presentation was monitored via Webcast in New York.
According to Menzer, India is Wal-Mart's fastest growing sourcing
market. The world's largest retailer this year expects to export $1.5
billion worth of merchandise to Wal-Mart stores from the country.
Wal-Mart already has over 2,000 stores worldwide, including 45 stores
in China. Its only presence in India is through its sourcing office
located in Bangalore.
Menzer said regulatory hurdles, which bar international retailers
from directly entering the Indian market, have thus far stymied its
plans to set up shop in the country.
"But it appears that a number of factors may change that," Menzer
said. Citing his talks with leading Indian government officials, including
Prime Minister Manmohan Singh, he said the government was considering
opening up foreign direct investment (FDI) to retailers.
"In our six government meetings, we created a very positive image
[of Wal-Mart] in what we think is a very important future market,"
Menzer said. "We've energized the FDI lobby and preempted the anti-FDI
lobby in India. I believe we've told our story."
At the same time, if the FDI regulations aren't lifted any time soon,
Menzer said Wal-Mart is no longer prepared to wait but is prepared
to make its foray into India with an Indian joint-venture partner
to "take advantage of this market while it's still developing."
Menzer did not say how many stores Wal-Mart was eyeing in India or
where they would be located.
"The average urban household income in India is about $3,000 a year,
roughly in line with China, and the consuming class has grown from
35 million families in 1996 to an expected 80 million this year. That's
roughly in line with the U.S.," Menzer said. "This is a very big opportunity
for us."
Wal-Mart could not immediately be reached for comment.
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