Wal-Mart May Enter India with Local Partner
Hopes for change in policy on foreign direct investment in retailing
Pune: Wal-Mart, the world's largest retailer, which has been waiting
in the wings for the government's go-ahead to enter the Indian market,
may consider entering it with a local partner. Ms Beth Keck, Director,
International Corporate Affairs, Wal-Mart International, said, "We
often work with partners and have done so in countries like Japan,
Central America, Mexico and China. They have been able to give us
a better understanding of local customers, which has helped us to
operate more effectively in these countries. We may consider this
approach for India too."
She was responding to a specific query from Business Line on the subject.
According to information available, Wal-Mart entered Japan, the world's
second largest retail market in 2002, by picking up a minority stake
in the Tokyo-based Seiyu super market chain. It spent an estimated
$600 million last year to increase its stake to over 53 per cent,
making Seiyu a Wal-Mart subsidiary.
Of course for Wal-Mart, there is still a policy hitch to be over come
in India as the present official stance allows only `single brand'
retailing to be carried on with foreign direct investment. But here
too, Wal-Mart is hoping that things would change.
"We welcome the Indian Government's movement in allowing 51 per cent
FDI in retail to single brand companies and hope they eventually will
open this sector more broadly to foreign investment," Ms Keck added.
Asked if Wal-Mart would discuss the issue of a broader scope for FDI
in retail, Ms Keck said, "The Indian government's policy on foreign
direct investment in retail is just one of several topics which we
discuss with Indian government officials. As a purchaser of goods,
we also are interested in learning about a wide range of areas that
affect our sourcing from the country."
The Arkansas-based retailer's interest has to be seen in the context
heightened activity in retailing with,corporate heavyweights such
as Reliance Industries jumping in on the retail bandwagon to cash
in on a market estimated to be worth $350 billion by 2010.
Meanwhile, the retailer with $285 billion in revenues is significantly
increasing its global sourcing out of India and will source $640 million
worth of home wares, textiles, apparel and fine jewellery this year.
"Direct sourcing from the region will continue to grow, as suppliers
in India, Sri Lanka and Nepal are innovative and respond quickly to
new trends for apparel and goods found in Wal-Mart retail outlets,"
Ms Keck said.
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