Uncle Sam's shopping cart rolls into India
September 15, 2012 8:07 AM Subscribe
After years of severe setbacks, plans gone awry, limited backdoor entry, millions of dollars spent lobbying and a truculent audience, Wal-Mart finally gets a green signal for the Indian market. Prime Minister Manmohan Singh announced lifting of restrictions on foreign investment in India's retail and aviation sectors as an economic boost. Many are sceptical. The truculence remains. What happens next?
Can I just say that "truculence" is one of my favorite words?
posted by Faint of Butt at 8:18 AM on September 15, 2012 [1 favorite]
posted by Faint of Butt at 8:18 AM on September 15, 2012 [1 favorite]
MetaFilter: The truculence remains
posted by Egg Shen at 8:19 AM on September 15, 2012 [13 favorites]
posted by Egg Shen at 8:19 AM on September 15, 2012 [13 favorites]
This is a major proposed economic reform that covers foreign big box retailers (like Wal-Mart), single brand retailers, as well as the aviation industry. On the 13th, a diesel fuel price hike (subsidy reduction) was also put forth. I don't see why this is being framed so narrowly as a Wal Mart story. It is about much more than that.
posted by beisny at 8:20 AM on September 15, 2012 [1 favorite]
posted by beisny at 8:20 AM on September 15, 2012 [1 favorite]
This NYTimes piece has some good reactions. This is also quite informative. One of the key points is the following:
"A sizable portion, some estimate as much as 40 percent, of the food Indian farmers grow rots before it gets to a consumer, and giant stockpiles of grain and other essentials often spoil before they are distributed.
The government has laid out some very specific conditions, even as it has opened the door to Wal-Mart and others, designed to protect the livelihood of some of India’s tens of millions of small shopkeepers."
The key requirement is "-At least 50 percent of the total foreign direct investment brought in should be made in “`back-end infrastructure,” which does not include building stores or any land costs. It does include: “investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house and agriculture market produce infrastructure.”
posted by beisny at 8:43 AM on September 15, 2012 [4 favorites]
"A sizable portion, some estimate as much as 40 percent, of the food Indian farmers grow rots before it gets to a consumer, and giant stockpiles of grain and other essentials often spoil before they are distributed.
The government has laid out some very specific conditions, even as it has opened the door to Wal-Mart and others, designed to protect the livelihood of some of India’s tens of millions of small shopkeepers."
The key requirement is "-At least 50 percent of the total foreign direct investment brought in should be made in “`back-end infrastructure,” which does not include building stores or any land costs. It does include: “investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house and agriculture market produce infrastructure.”
posted by beisny at 8:43 AM on September 15, 2012 [4 favorites]
For U.S. President Barack Obama there could be nothing more cheering. The ‘underachiever’ now goes to the presidential polls with a lot of confidence — India’s decision to open up FDI in multi-brand retail comes as a shot in the arm for the beleaguered American economy and will obviously boost his poll prospects.From the "are sceptical" link. Trenchant. No doubt the Romney camp's accusations that Obama sympathizes with terrorists and hates American job creators will simply blow away on the winds of change once the American people learn that there's some new corporate retail investment going on in India. This will definitely be remembered as the election the Indian consumer won for the American president.
This was one of the things I loved about reading Indian media when I lived there: the solipsism, self-importance and unique linguistic tics of the Indian upper castes. ("The Central Government, I think, has lost the nerve and they are now taking all anti-people decisions in one go.")
I mean that sincerely: As a Canadian, it was totally refreshing to be immersed in a worldview where all world events - even American elections - were understood to be at least partially dependent on the internal affairs of a place that wasn't America.
posted by gompa at 8:50 AM on September 15, 2012 [5 favorites]
gompa, I feel this same way, but there are times when even this solipsism can go too far. I remember a front page Times of India article several years ago which covered the choice of a small, local college in California to begin teaching a course on Indian Film.
posted by beisny at 8:57 AM on September 15, 2012
posted by beisny at 8:57 AM on September 15, 2012
I'd say that requirement that the FDI be directed towards infrastructure is sort of moot, in that the Indian logistics sector can't support the supply chain operations of a Walmart or Tesco without major investments anyway - they would have to spend much of their money there whether the government told them to or not.
Whatever damage the big boxes can do to the existing retail sector, it seems like the benefits to the the Indian economy as a whole would more than counterbalance, so long as letting them in leads to a general modernization of the supply chain and logistics sectors whose current moribund state are such a drag on India. The tricky part is that the government has to manage this little project so that the benefit doesn't just accrue to the big boxes while hopefully also keeping them from devastating retail employment.
posted by strangely stunted trees at 9:14 AM on September 15, 2012 [2 favorites]
Whatever damage the big boxes can do to the existing retail sector, it seems like the benefits to the the Indian economy as a whole would more than counterbalance, so long as letting them in leads to a general modernization of the supply chain and logistics sectors whose current moribund state are such a drag on India. The tricky part is that the government has to manage this little project so that the benefit doesn't just accrue to the big boxes while hopefully also keeping them from devastating retail employment.
posted by strangely stunted trees at 9:14 AM on September 15, 2012 [2 favorites]
Solipsism is the philosophical idea that only one's own mind is sure to exist. The term comes from the Latin solus (alone) and ipse (self)
Technically, can it be called solipsism if a large percentage of the press indulge in it?
I always saw it as a response to noticing being noticed. Until the past decade or so, India was rarely in international news or even noticed beyond the "spiritual/Goa/hippie/guru/ashram" stuff. Only the advent of the internets and the shifts in the global economy have changed that. I believe for the longest time it was considered "not a friend of Washington's" as Pakistan used to be. This was long ago in internet time. And so the media would pick up little hints and bits of "India" in the news or having been noticed rather assiduously.
As for why this story is about Walmart rather than the so called economic reforms is because of the history of their intense lobbying to make this happen.
World's largest retailer Walmart can finally breathe easy in India as years of its lobbying for access to the Indian retail market has fructified with the government implementing up to 51% FDI in multi-brand retail.
Though, given that the world today isn't the world of 2005, will it even be worth it? The first so called retail revolution in India flopped quite miserably.
posted by infini at 10:41 AM on September 15, 2012
Technically, can it be called solipsism if a large percentage of the press indulge in it?
I always saw it as a response to noticing being noticed. Until the past decade or so, India was rarely in international news or even noticed beyond the "spiritual/Goa/hippie/guru/ashram" stuff. Only the advent of the internets and the shifts in the global economy have changed that. I believe for the longest time it was considered "not a friend of Washington's" as Pakistan used to be. This was long ago in internet time. And so the media would pick up little hints and bits of "India" in the news or having been noticed rather assiduously.
As for why this story is about Walmart rather than the so called economic reforms is because of the history of their intense lobbying to make this happen.
World's largest retailer Walmart can finally breathe easy in India as years of its lobbying for access to the Indian retail market has fructified with the government implementing up to 51% FDI in multi-brand retail.
Though, given that the world today isn't the world of 2005, will it even be worth it? The first so called retail revolution in India flopped quite miserably.
posted by infini at 10:41 AM on September 15, 2012
It is hard to think of WalMart as the savior of any country's economy. Will ConAgra be imported next to devastate the family farms?
posted by Cranberry at 12:29 PM on September 15, 2012
posted by Cranberry at 12:29 PM on September 15, 2012
A note in my facebook feed today said, "Congress just won my vote back." Moments like these remind me that I don't understand my own country one bit.
posted by vanar sena at 12:41 PM on September 15, 2012 [2 favorites]
posted by vanar sena at 12:41 PM on September 15, 2012 [2 favorites]
The real sticking point in the negotiations was that the Indian gov't insisted that the bouncy smiley-face ball that reduces the prices be drawn to wear a bindi. Walmart finally relented.
posted by Renoroc at 2:25 PM on September 15, 2012
posted by Renoroc at 2:25 PM on September 15, 2012
The poor bastards...they will never know what hit them.
posted by twidget at 2:57 PM on September 15, 2012
posted by twidget at 2:57 PM on September 15, 2012
Technically, can it be called solipsism if a large percentage of the press indulge in it?
I meant it figuratively - that India's chattering class as a group is solipsistic. And I didn't mean it as particularly critical. India's a nation of more than a billion and a distinct branch of civilization dating back thousands of years; it's earned the right to assume it is a central node in the larger web.
Still, when I was there in '99-'00, there was a ton of backpatting and navelgazing regarding Indian prominence in the digital world, and I always found it a little rich when there was this assumption among columnists and commentators that anyone other than them had noticed the Desi boomlet amid the larger Silicon Valley explosion.
We Canadians do the same thing, from a much smaller population base. Ask us to name prominent Canadians in the American entertainment-industrial complex, and we'll be both eager to tell you and mock-shocked you didn't know that so-and-so was Canadian.
posted by gompa at 3:10 PM on September 15, 2012
I meant it figuratively - that India's chattering class as a group is solipsistic. And I didn't mean it as particularly critical. India's a nation of more than a billion and a distinct branch of civilization dating back thousands of years; it's earned the right to assume it is a central node in the larger web.
Still, when I was there in '99-'00, there was a ton of backpatting and navelgazing regarding Indian prominence in the digital world, and I always found it a little rich when there was this assumption among columnists and commentators that anyone other than them had noticed the Desi boomlet amid the larger Silicon Valley explosion.
We Canadians do the same thing, from a much smaller population base. Ask us to name prominent Canadians in the American entertainment-industrial complex, and we'll be both eager to tell you and mock-shocked you didn't know that so-and-so was Canadian.
posted by gompa at 3:10 PM on September 15, 2012
yes, the sctv phenomena we had at the second city ...
posted by infini at 3:40 PM on September 15, 2012
posted by infini at 3:40 PM on September 15, 2012
Funny. I think the people complaining about culturally-insensitive retail establishments owned by foreigners in India should be sent to East Africa to go shopping with African families at the Indian-owned retail establishments there.
Example: the staff at the largest retail fabric shop in Kigali, Rwanda didn't know (when I went there) what a mushanana was. This is roughly comparable to opening a men's formal clothing store in the USA and not knowing the word "tuxedo."
posted by 1adam12 at 2:02 AM on September 16, 2012
Example: the staff at the largest retail fabric shop in Kigali, Rwanda didn't know (when I went there) what a mushanana was. This is roughly comparable to opening a men's formal clothing store in the USA and not knowing the word "tuxedo."
posted by 1adam12 at 2:02 AM on September 16, 2012
I suspect its less to do with Walmart's cultural sensitivity and more to do with their business practices. Don't people block their entry in towns even in their domestic market?
posted by infini at 2:35 AM on September 16, 2012 [1 favorite]
posted by infini at 2:35 AM on September 16, 2012 [1 favorite]
Yeah, the threat of Wal-Mart has nothing to do with cultural sensivity than with the spectre of optimized logistical efficiency and wide inventory of Wal-Marts across the span of urban India driving single shutter retail stores out of business. And I suppose, to a much lesser extent, the monopsony power that WM may wield upon cottage industries, due to standardized requirements and limited shelf space, although that is a far-fetched fear as of now.
posted by Gyan at 3:39 AM on September 16, 2012 [1 favorite]
posted by Gyan at 3:39 AM on September 16, 2012 [1 favorite]
I took a closer look at this about 7 years ago when the conversation was first on about Walmart's India entry - this was the time when the Indian market was actually growing, not shrinking as it is now and retail still held potential for revolution.
One of the things that makes me question the real impact of Walmart on the neighbourhood kirana shop is the local buyer behaviour. Mom and pop stores in small towns in the US close down due to their inability to compete on price and price alone. They are still on the high street and not on every convenient corner in the residential streets. People go to them in cars and do their own shopping.
Yet, how many shop in this way in India? Malls are fun and airconditioned. But the guy who needs to pinch his purse the most is highly unlikely to visit Walmart on a regular basis, beyond the novelty experience, unless the price can compete with the convenience of the lady sitting on the ground right outside the home or the wandering cartman who'll offer you 50p worth of cabbage. Its also the personal relationship between the vendor and customer that may surpass the difference of a few pennies here or there.
Other single brand retailers may not have the same experience - Tesco or Carrefour aren't exactly positioned in the same segment as a Walmart (unless they change the brand's positioning to be premium?). My eye is on IKEA, as I'd like to see how they manage to navigate the Indian market and its peculiarities.
posted by infini at 3:59 AM on September 16, 2012
One of the things that makes me question the real impact of Walmart on the neighbourhood kirana shop is the local buyer behaviour. Mom and pop stores in small towns in the US close down due to their inability to compete on price and price alone. They are still on the high street and not on every convenient corner in the residential streets. People go to them in cars and do their own shopping.
Yet, how many shop in this way in India? Malls are fun and airconditioned. But the guy who needs to pinch his purse the most is highly unlikely to visit Walmart on a regular basis, beyond the novelty experience, unless the price can compete with the convenience of the lady sitting on the ground right outside the home or the wandering cartman who'll offer you 50p worth of cabbage. Its also the personal relationship between the vendor and customer that may surpass the difference of a few pennies here or there.
Other single brand retailers may not have the same experience - Tesco or Carrefour aren't exactly positioned in the same segment as a Walmart (unless they change the brand's positioning to be premium?). My eye is on IKEA, as I'd like to see how they manage to navigate the Indian market and its peculiarities.
posted by infini at 3:59 AM on September 16, 2012
Fresh produce is a different kettle of fish (heh), and WalMart may not be able to break existing vendor arrangements or customer loyalty. But for packaged goods where quality of product is taken for granted, the diversity, breadth and one-stop destination afforded by the Wal-Mart model could make for a compelling experience.
posted by Gyan at 4:07 AM on September 16, 2012
posted by Gyan at 4:07 AM on September 16, 2012
Yes, I can see that. Though in the intervening years since haven't local brands like Big Bazaar and whatnot come up in their place? Perhaps they are the ones who are truly worried, rather than the corner kirana.
Btw, The government that sold India with photos of newspaper headlines from Friday.
posted by infini at 4:58 AM on September 16, 2012
Btw, The government that sold India with photos of newspaper headlines from Friday.
posted by infini at 4:58 AM on September 16, 2012
This was one of the things I loved about reading Indian media when I lived there: the solipsism, self-importance and unique linguistic tics of the Indian upper castes.
Caste?
One of the things that makes me question the real impact of Walmart on the neighbourhood kirana shop is the local buyer behaviour. Mom and pop stores in small towns in the US close down due to their inability to compete on price and price alone. They are still on the high street and not on every convenient corner in the residential streets. People go to them in cars and do their own shopping.
Yet, how many shop in this way in India?
Anecdata, but we've had branded retail stores for 3-4 years now in Hyderabad; we're talking of the likes of (Birla's) more, Food World, Spencer's, Reliance Fresh and (the local, Telugu-Desam-linked) Heritage marts. In my old middle-class neighbourhood in the middle of the town, roughly every apartment block used to have a kirana store at the bottom.
Virtually all of them have closed down now; they were still around when Food World moved in, but Food World _and_ more _and_ Spencer's _and_ Heritage moved in, they all closed down. As a consumer though, I have no complaints; had been better this way for me. The earlier kirana store-owners were more inclined to bully than serve customers; it was all small-town-y in that everyone gossiped about what you buy etc. You get none of that shit in those chain stores.
posted by the cydonian at 10:35 PM on September 17, 2012
Caste?
One of the things that makes me question the real impact of Walmart on the neighbourhood kirana shop is the local buyer behaviour. Mom and pop stores in small towns in the US close down due to their inability to compete on price and price alone. They are still on the high street and not on every convenient corner in the residential streets. People go to them in cars and do their own shopping.
Yet, how many shop in this way in India?
Anecdata, but we've had branded retail stores for 3-4 years now in Hyderabad; we're talking of the likes of (Birla's) more, Food World, Spencer's, Reliance Fresh and (the local, Telugu-Desam-linked) Heritage marts. In my old middle-class neighbourhood in the middle of the town, roughly every apartment block used to have a kirana store at the bottom.
Virtually all of them have closed down now; they were still around when Food World moved in, but Food World _and_ more _and_ Spencer's _and_ Heritage moved in, they all closed down. As a consumer though, I have no complaints; had been better this way for me. The earlier kirana store-owners were more inclined to bully than serve customers; it was all small-town-y in that everyone gossiped about what you buy etc. You get none of that shit in those chain stores.
posted by the cydonian at 10:35 PM on September 17, 2012
Class and caste is often considered erroneously synonymous wrt India.
posted by infini at 1:40 AM on September 18, 2012
posted by infini at 1:40 AM on September 18, 2012
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posted by 3.2.3 at 8:14 AM on September 15, 2012