Wal-Mart Seeks Participation In India's Retail Industry
In a bid for increased consumerism on a global level, Wal-Mart Stores, Inc.(NYSE: WMT) US Chief Merchandising Officer, Duncan Mac Naughton, participated in today's Credit Suisse 2nd Annual Consumer Conference, speaking about marketing initiatives moving forward.
Tough economic times call for increased sponsorship, which leads some mega-marketers to attempt to gain further global access into smaller economic communities. While US retail sales adjust to an ever-changing rationale for economic equilibrium in our economy of trending supply and demand, India’s government on Wednesday suspended their plan to open up its retail market to foreign chains.
India's Finance Minister Pranab Mukherjee says the plan would be "suspended until a consensus is developed through consultations amongst various stakeholders,” which consensus would include all political parties. Opposition to the suspension attempted to persuade others that the plan to allow foreign investment had potential to create new jobs and might not hinder smaller retailers' success.
While foreign investment in India’s $450 billion retail market has been in question for more than a decade, India's government, in anticipation of the debate, added riders to its policy proposal which require that foreign companies invest at least $100 million over five years, and buy 30 percent of their goods from India's small and midsize businesses. Supermarket chains such as Walmart would be restricted to cities with more than 1 million people.
“The government was planning to go about it gradually and cautiously anyway. But today’s decision sends out mixed signals to foreign investors,” said Raghav Gupta, of US government consulting firm Booz & Co, adding that he believes this move "will create uncertainty about India in their minds.”
But for some, the decision came as a relief. “In a democracy, the government has to listen to the voices of the people. It cannot bring in foreign companies and ignore the demands of Indian people,” said Praveen Khandelwal, secretary general of Confederation of All India Traders. He defends the decision as being one that “shows that the government has a big heart and will not kick our stomachs and snatch away our livelihoods.”