ThisstorywasdonemyJuniorspringsemesterandIwroteitwiththehelpofanother

journalismstudentinIndia.Thisarticlewaspublishedonlineinvariousoutletsbutthemainone
wasindiablooms.com.Ihavecopyandpastedthestorybelowandalsoprovidedtheoriginal
storylink.(http://indiablooms.com/ibns_new/lifedetails/F/148/walmartsindiachallenge.html)

WalmartsIndiaChallenge

Allday,theBurrabazarareainKolkata,Indiaiscrowdedwithcustomersbrowsingstreetside
shopssellingeverythingfromclothingtohouseholdgoodstohardware.
BiplabDasstore,ProsshiddhoBhandar,ispartofthiscolorfulcommercialtapestry,selling
food,drink,householdgoodsandotheritemsfromasingleroom.Dascompetesfiercelywith
otherareashopsnotmuchbiggerthanhis,curbinghisprofittoprovidegoodqualityproductsat
cheaprates.
Someday,hemayhaveamuch,muchbiggercompetitorpeddlingthesamepricematching
practice.
Walmart,theworldslargestretailer,isvyingforabiggerpresenceinIndiaandaccesstoits
potentialconsumerbaseofmorethan1.2billion.
Thecompany,basedintheU.S.stateofArkansas,anditsAmericancompetitorsareaidedbya
tideofchangeintheAsiannation.Asthemiddleclassgrows,Westernizedlifestylesare
replacinglongheldhabitssuchasshoppingalmostdailyforfresh,localfood.
Theresahugegrowthindivorceratesandeducationlevels,explainedUniversityofKentucky
ProfessorDevanathanSudharshanwhoispartoftheGattonBusinessCollegesDepartmentof
MarketingandSupplyChain.TheamountoftimeanIndianconsumerhadtogointoamarket
andnegotiateiscomingdown.
ButDasandotherIndianbusinessownershaveneverheardofWalmart.Theyhavenoideaof
thecontroversysurroundingtheAmericancompanysbusinesspracticesacontroversynow
playingoutinthepoorestsectionofLouisville,thelargestcityintheU.S.stateofKentucky.
TheydontknowhowmanyAmericansdependonthecompanyforemploymentandforcheap
goodsinastrugglingeconomy.Theyhavenoideahowmuchtheirliveswillbeaffectedifa
Walmartcomestotheirregion.
AndthatsjustwhattheAmericancorporategianthasbeentryingtodo.
Globalreach
Walmartwhichhasmorethan10,000storesineveryU.S.stateand27countrieshasbeen
attemptingtobreakintotheIndianmarketsince2007,accordingtoForbesmagazine.That
meansthecompanyneedstocomplywithIndiasstrictrulesforoutofcountryinvestors,called
ForeignDirectInvestmentlaws.

FDIlawsdictatethatanyforeigncompanyinterestedinenteringIndiasmarketmustbuya
companyinthecountryorpartnerwithanexistingIndianbusinessinordertoexpandits
operations.
Initially,WalmartcombinedwithBhartiEnterprisesandestablishedabout20wholesalestores
throughoutIndiabythenameofBestPriceModernWholesale.Thesestoresselldirectlyonlyto
retailersandarelocatedinPunjab'sAmritsar,Bathinda,Jalandar,Ludhiana,andZirakpur.
Butrecentlythatpartnershiphasfallenthrough,althoughthestoresremain.Accordingtoan
NDTV.comarticle,therehasbeenspeculationthatitwasdueinparttothescandalthatWalmart
facedin2013whentheNewYorkTimesbrokeastoryclaimingWalmarthadbeenbribing
Mexicanofficialsinordertospeeduptheirbuildingplans.
TheinvestigationintotheseallegationsinMexicoisstillongoing,butifWalmartisfoundguilty,
itwillbeindirectviolationoftheU.S.ForeignCorruptPracticesAct,whichbanscompanies
frompayingforeigngovernmentsinordertofurtherthecompanysagenda.
AftertheTimesstorybroke,WalmartandtheIndiangovernmentturnedtheirattentionto
WalmartspresenceinIndia,wheretherewerealsorumorsofbriberyandlobbying.Unlikein
theUnitedStates,corporatelobbyingisillegalinIndia.
TheinvestigationintotheIndianmarketallegationsprovedinconclusive,astherewasno
evidencetosupporttheclaims.
Moneyscandalsareonething,butWalmartisfacingabiggerprobleminBrazilandChina:lack
ofcustomers.
Walmartsemphasisonbulkbuyinggoesagainstthetraditionalbuyinghabitsofthoseoutside
theUnitedStates.
PooreconomicgrowthhasalsohinderedWalmartsgrowthinChinaandBrazil.About25stores
closedinBrazilthispastyearalone.
MeanwhileintheUnitedStates,Walmartisstrugglingtomaintainthecompanysvastmarket,
whichhasbeengrowingsteadilysinceSamWalton,attheageof44,foundedthefirstWalmart
storeinRogers,Alabamain1962andwentpublicin1970.
Saleshavebeendownforthecompanythispastyear,resultinginstoreclosuresandlayoffs.
SamsClubcutabout2percentofitsworkforcethispastJanuaryalone.
ThebreakupwithBhartiEnterprisemeansthatWalmartisinsearchofanewbusinesspartnerin
India.

ThecompanyhasstartedlookingintoecommerceasitsnewapproachtotheIndianmarket
howevertheywillstillbelimitedtosellingtoretailersandnotdirectlytoconsumers.Thisrefers
tothebuyingandsellingofitemsonline.
Ourexperienceworldwidesupportsthefactthatecommerceisanimportantandgrowing
area,saidKevinGardner,Walmartsseniordirectorofinternationalaffairs.Weencouragethe
GovernmentofIndiatoconsideropeningecommerceforFDI.
ButforsmallbusinessesinIndiaasformanyinAmericatheretailgiantposesabigthreat.
Forexample,thecitizensofLouisvilleandVersailles,Ky.,havebegunresistingthecompanys
effortstoaddmorestorestotheircities.BothalreadyhaveWalmarts,andcriticsfeelmorestores
willoverwhelmthecommunities.
Inmanyways,however,thecompetitivethreatinIndiaismorebasicandpersonal,affectingnot
onlyshoppersandcommunitiesbutworkersaswell.
Currently,Walmartemploys2.2millionassociates.BiplabDasemploysthree.
Savingpeoplemoney
KentuckyisoneofthepooreststatesinAmerica.OutsideofitsbigcitieslikeLexingtonand
Louisville,manytownsareruralandpoorandfilledwithrundownhousesandbuildings.
Afewmilesfromthechaosinmanyofthesecounties,aWalmartcanoftenbefound.
InKentuckyalone,thereare28,454employeesworkinginover100Walmarts,including
SupercentersandSamsClubs.Waltonwastheonewhofirstcameupwiththeideaforthe
Supercenters,whichincludeamarketsection,homegoods,media,andapharmacy,sometimes
evenaliquorstoreandaneyedoctor.
SamsClubsfocusmoreonbuyingitemsinbulk,andlookmorelikewarehousesontheinside.
BythetimeofWaltonsdeathin1992,hehadbeenawardedthePresidentialMedalofFreedom
byPresidentGeorgeH.W.Bush.AndWalmartcontinuestobeafamilyrunbusiness.
Itsabigcorporationwithasmallbusinessimage,builtontheideaofcommunityandoften
advertisingasthelocalneighborhoodWalmart.Thecompanysmottoissavingpeoplemoney
sotheycanlivebetter.
Walmartofficialsalsostressthattheygivetotheircommunities.Foryears,Walmarthasrun
scholarshipsandinternshipsforcollegestudentsandmademanycharitabledonationsto
nonprofitorganizationsacrosstheworld.

ThecompanyisdeeplyingrainedincommunitiesaroundKentucky,whichisinthesouthernpart
ofthecountry.WalmartisoneofthesponsorsfortheannualEastKentuckyLeadership
Conference,whichfocusesonissuesimportanttotheAppalachianregionofthestate.The
companyalsocurrentlyprovidesgrantsforstudentsoftheRedCrossKentuckyNurseAide
Trainingprogram.
WalmartrecentlybegandevelopingaBuyAmericanCampaignasaplantohelpboostthe
U.S.economy.BuyingAmericanhasbeenahottopicforyearsinthebusinessworld,asmany
companiesfinditcheapertooutsourcebusinesstoothercountriessuchasChina,despiteprotests
thattheyaretakingjobopportunitiesfromAmericancitizens.
Thecompanyscampaignwillbeatenyearprocess,accordingtoWalmartswebsite,whichwill
involvejobcreationfornotonlyaveragecitizensbutalsoveterans.
WalmartsinvolvementinAmericadoesnotstopthere.
WalmarthasclosetieswiththeU.S.governmentandagovernmentrelationsdepartmentto
regulateinteractionswithofficials.
Walmartworries
SeveralfinancialexpertsandpoliticiansareexpressingconcernsaboutWalmartsentryinto
India.
Currently,theIndiangovernmentallows51percentFDIintheIndianretailsector.Buttherehas
beenanuproarfromdomesticandforeigneconomicgroupsdemandingthatitberaisedto100
percent.Butifthatsallowed,someworrytherewillbewiderepercussions.
ThelargestcontributorstotheIndianeconomyarethesmallscaledepartmentstores.Indian
politiciansfearthattheentryofthemultibrandretailerwouldhaveadevastatingeffectonsmall
shopkeepers,workers,farmersandconsumersofIndia.
TheyfearfreetradeforWalmartwouldmeantheendoffreedomforfarmers,hawkersand
vendors,whocompriseabout62percentoftheIndiastotalpopulation.Someofthemeventhink
thatIndiamightbefacingasituationlikeonethataroseinThailand,where60,000smalltraders
wereforcedtoshuttertheirshopsduetotremendouseasingofforeigndirectinvestmentnorms.
Inthegeneralmarketplace,Indianretailerscanchoosetobuyfromhundredsoftraders.With
Walmart,farmerswouldhaveonlyonebuyer,andconsumerswouldhaveonlyoneseller.Thats
whysomecriticsfearWalmartandsimilarlargestorescoulddestroyIndiassmall,independent
retailsystem.

WalmartclaimsthatIndianfarmerswillearnmoreifthestoreisallowedtotakeholdofthe
Indianmarket.Butmanyeconomistsandpoliticiansbelievethatbigretailgoeshandinhand
withbigagriculture,leavingnoplaceforsmallfarmersinaWalmartworld.
ApplescomefromthePhilippinesandorangesfromMexicointheUS,saidantiWalmart
activistWadeRathke,founderoftheAssociationofCommunityOrganizationsforReformNow
andServiceEmployeesInternationalUnionLocal100.Sowhatistheguaranteethattheywill
notimportteafromSriLankaorBangladesh,insteadofsourcingitfromIndia?
ActivistsalsosayWalmartsinvolvementinIndianagriculturecouldcreatemoreeconomic
povertyandleaveIndiapoorerasacultureandcivilizationbecauserealfreetradetakesplace
facetofaceonthestreetsandinthehaatsandbazaars.BoxstoresandWesternretailgiantswill
robIndiaofitsdiversityanddecentralizedeconomy,whichisthesourceofIndiasresilienceand
realwealthofthepeople,theysay.
InanarticlepublishedintheFinancialExpressaboutWalmartsvisioninIndia,RajJain,
presidentofemergingmarketsforWalmartsaid,OnekeyreasonforWalmartssuccessis
localization.Wecarrylocalproductsfromlocalsuppliersthatappealtolocaltastes,needsand
fashions.
ButadetailedlookintotheWalmartsystemoftradesuggeststheopposite.DipankarDasgupta,
professorofeconomicsattheIndianStatisticalInstitute,isoftheopinionthattheWalmart
modelisbasedonglobalizationandnotlocalization.Hefurtheradds,IfWalmartwastocarry
onlylocallyproducedgoods,thenitwouldbedifferentineverycountry.
RenownedauthorCharlesFishman,inhisbookTheWalMartEffect,wrote,Walmarts
globalizationstrategiesarecleverandsomethingthathasprovidemanifoldsofdividendsfor
them.
AtypicalWalmartstoresells60,000differentitems;aSupercentersells120,000items.Eighty
percentofthoseitemsaresourcedfromChina.
Walmartisoneofthebestbeneficiariesofcorporateledglobalization,andhasmade
communitiesdependentonsuppliesfromthousandsofmilesawayforeverydayfromthefood
weeatandtheclotheswewear,saidAbhirupSarkar,acolleagueofDasgupta,.
Suchglobalizationhasalargenegativeimpactonthelocalsupplychainintermediaries,which
constitutesabout800millionofthepopulationofIndia.
Toacertainextent,theirfearsareborneoutbywhatshappeninginKentucky.
Walmarthasbeenknowntobuyupbuildingssothatotherbusinessescannotcomein.
Opponentsofthestoresarguetheydetractfromtheircommunitiesoverallwellbeingas
customersbecomemoreandmoredependentonWalmartandsoonforgetthesmallbusinessesin
thearea.

Anuncertainfuture
ShouldIndiaopenupitsgiganticretailsectortothelargestmultibrandretailerintheworld?
Opponentsinthebusinessandpoliticalworldsemphaticallysayno.Butthesesamepoliticians
andeconomistsalsosayIndiaspreservationfacilitiesandfoodsupplyisverybackdatedand
neglectedandinneedofupdating.
Sowhatshouldbedone?ShouldIndiastopfearingWalmartandletthecompanyinwith100
percentinvestmentfreedom,orshouldthepresentstancebeupheldandseverechecksbekeptin
Walmartsinvestments?
ThechiefconcernofIndianadministratorstryingtostopWalmartsentryintotheIndianmarket
isthattheretailermighthaveadevastatingeffectonnumerousstakeholdersinIndia.
Amongthemarefarmers,whonowsupplythefoodmarketthatWalmartismosteagertoenter.
Currently,thevastmajorityoftheIndianpopulationisemployedinagriculture,andfarmersgain
alotfromwhoeverinvestsinthefoodsupplychaintobringfoodfromthefieldstothe
consumer.Inthepresentsystemoftrade,farmersselltotradersatratesdictatedbythelatterin
thebazaars.
FarmersinIndiaareallowedtoselltheirproduceonlyatgovernmentapprovedmandis,or
markets.Often,afarmerhastotravellongdistancesandincursubstantialtransportation
expenses,onlytosellatratesdictatedbythewholesalebuyer.Someexpertsarguethissystem
yieldspoorqualityfoodforconsumersandlowearningsforfarmers.
Tolurethesefarmersawayfromthisexistingsystem,Walmartaimstohelpthemimprovetheir
productivityandoffer20percentmorethanwhatlocaltradersarepayingforwhattheygrow.
Walmartaimstobuildupanetworkof35,000farmersby2015.Itsunclearwhetherthe
companywillachievethatlandmark,butthepresentsystemoftradeisnotpayinganygood
dividendstothefarmersafactthatisevidentfromthenumberoffarmerswhoarebelowthe
povertylineinIndia.
Regardlessofwhetherthecompanymeetsthisgoal,somebusinessexpertssaychangeinIndiais
inevitable.
Ibelieve,whetheritsWalmartorotherbigcompanies,eventuallytheyaresuretodisplaceall
theoldinformalmarkets,saidtheUniversityofKentuckysSudharshan,whohaslecturedin
India.
EvenDasagreedthatIndiaspreservationfacilitiesarelackingandthatWalmartcouldprovide
thetechnologiesneededtoimprovethem.

ThisisexactlywhymanyeconomistssayIndianeedsWalmartbecauseitwouldspawnmutual
profitforallthreeentitiesinvolvedintrade:farmers,consumersandWalmart.
Asfarasthesmalltradersareconcerned,economistBiswajitMondalsaidtheyareessentially
middlemenwho,ineffect,produceminimumservicebutgainalot.Theyshouldberedirectedto
adirectionwheretheirproductivitycouldbehigher.
ThenewNarendraModigovernmentinIndiacoulddecidethefateofWalmartspresenceinthe
country.Butevenifthecompanygetsthegreenlight,expertssay,theIndianpeoplewill
ultimatelydecidewhethertoshopthereoratthelocalshopstheyvelongfrequented.
BackatthemarketplaceinKolkata,Daspondershisfuture,andthinksofhisworkers.
WhenaskedifajobofferfromWalmartwouldenticeDastogiveuphisstore,hesaidno.It
wouldbetempting,butitsnotonlyamatterofmylivelihoodbutthatofthreeotherpeoplewho
workunderme.Icantjustgoawayandleavethemjobless.
AFACTSHEET
WalmartsheadquartersareinBentonville,Arkansas
InIndia,WalmarthasWholesalestoresinPunjab,Amritsar,Bathinda,Jalandar,Ludhiana,
andZirakpur
AveragesalaryforaWalmartworkerisaround7.259.25USD(439.63560.91rupees)an
hour
Walmartoffersemployeessomebenefitslike10percentdiscountonitems,healthcareplan,
retirementplan,andopportunitiesforpromotions
ForUniversityofLouisvillestudentCaseyEvans,workingforWalmartseemedlikeagreat
opportunitytomakesomeextracashforcollege.
Itisprobablyoneofmyfavoriteplacestoshop,saidEvans,whoworkedinaGlasgowstore
duringthesummerof2012.IthaseverythingIneedandthepricesarethebestintown.
Asathirdshiftstocker,Evansaveragedaninehournightshiftfourdaysaweek.Hispaywas
$7.95anhour,abovetheaverageminimumwageof$7.25(435rupees)anhourintheU.S.state
ofKentucky.
ButEvanswaslabeledasaparttimeworker,anddescribedthebenefitsasminuscule.He
explainedthattheonlybenefithegotwasa10percentdiscountthatcouldbeappliedtoallitems
atthestoreexceptfood.

Ididnotlikeworkingthereafterafewweeksbecauseitdidnotseemlikethepaywasworth
thework,saidEvans,althoughheovercamehisobjectionsanddecidedtoalsoworkthere
duringhiswinterbreakforthemoney.
Duringhistimethere,EvanssaidheheardrumorsthatWalmartwasnotgoodtotheir
employees.Buthesaidthathismanagersweregoodtohim.
HedidseethechangeWalmartbroughttohiscommunity.
EvansobservedthatamajorimpactthatWalmarthashadonthistownofmorethan14,000isits
needtobethetopseller,whichpresentsathreatformomandpopbusinesses.Walmartisin
thepracticeofbuyingupbuildingsandcompaniesinthesesmallerareasinordertokeepthe
competitionout.
ComingfromsmalltownAmericawhereeverybodyknowseveryone,hesaid,Walmarthas
almostmonopolizedourmarket.
ASNAPSHOT
OnthecornerofSouth18thStreetandWestBroadwayintheU.S.cityofLouisville,Ky.,the
oldPhillipMorriscigarettemanufacturingplantsatemptyfor14years.ButanewWalmart
Supercenterwillsoongiveitnewlife.
Butresidentsandbusinessownersinthisimpoverishedareaofthecityaredividedabouthow
thisdevelopmentcouldaffectthecommunityoverthelongterm.
ManyLouisvillegovernmentleaderssupportthestore.Accordingtothepressreleasefrom
MayorGregFischersoffice,thedealwillcreatedmuchneededjobsfortheareafromthe
constructionworktotheoverallrunningofthestore.Thepressreleasestated,Theprojectwill
create300jobsintheWalmartstore,with$6millioninannualpayroll.Additionaljobswillbe
createdwiththeprojectsconstruction.
DespitethepromiseofWalmart,otherssayitcouldhurtthecommunityinsomeways.The
KentuckyLaborInstitute,anonprofitworkersorganization,isonethegroupsthatisagainstthe
ideaofaWalmartSupercenter.
KLIdraftedupitsownreport,whichlistedproblemsthatwouldarisefromaWalmart.The
reportsstatesthatWalmartisanunreliablebusinessbecauseithasahistoryofabruptly
abandoningbusinesssitesandcreatingadependencyontheirproducts.
KLImemberAveryKolersexplains,Walmartunderminesbusinessesthatarealreadythere,
runningthemfirstintodebtandthenoutofbusiness.