IMPACT OF WAL-MARTON INDIAN BUSINESS

Wal-Mart’s impact on India’s suppliers
and small businesses
Wal-Mart is the largest private employer in
the United States with 1.3 million
employees and is moving to dominate
retail sectors in other countries including
Mexico, Canada, and Brazil. Wal-Mart’s
size gives it power to drive down costs in
the retail and manufacturing sectors and to
ignore and even attack the rights of
workers. Workers and unions, small
businesses, environmental organizations,
investors, and political and religious
leaders in the U.S. and around the world
have condemned Wal-Mart’s refusal to
treat workers and communities with
dignity. These institutions have produced
numerous reports documenting Wal-Mart’s
abuses, many of them focusing on the
destruction of small businesses and jobs,
and the washing away of local production
by Wal-Mart’s flood of Chinese-made
goods.
While total imports to India from all
countries has risen by 56% in the last five
years, imports of Chinese-made goods to
India has jumped by more than 200% in
the same period.1 In 2003 alone, Chinese
imports to India grew by 45%, but Indian
manufacturing production grew by only
6.9%.2
Wal-Mart emphasizes the amount that it
sources from India, as a reason it should be
1 Government of India, Ministry of Commerce and
Industry

2 World Bank,

allowed to build stores. However, the
amount that Wal-Mart actually sources
from India is tiny when compared to Wal-
Mart’s sourcing operations in China.
Additionally, manufacturing work for Wal-
Mart is not reliable because the company
moves production wherever it can find the
lowest prices.
Wal-Mart’s entry to the Indian retail sector
is sure to produce a flood of cheap
Chinese-made goods. Even as Wal-Mart
was advertising its “Made in America”
products to American consumers in the
1990s, the company was quickly replacing
U.S.-made products with Chinese goods.
While once sourcing the majority of its
products sold in U.S. stores from the U.S.,
today up to two-thirds of goods sold in
Wal-Mart are imported from China.
Furthermore, Wal-Mart retail stores would
have a negative impact on small businesses
in India, and could force many small shops
and traders to close.
Wal-Mart’s Dependence on China
Wal-Mart emphasizes its contribution to
exports in India, yet in 2004 Wal-Mart
sourced only $1.2 billion worth of goods
from India, not even one-fifteenth of the
amount Wal-Mart purchased from China in
the same year.3 The total amount that
Wal-Mart sources from India every year
amounts to only a little more than a dollar
per person in India.4 And, if allowed to
open retail stores, Wal-Mart could upset
the import balance by importing massively
from China rather than using local
production.5
3 Bloomberg, 7/13/05
4 CIA World Fact Book, India, from 6/30/05
5 Atimes, 1/31/04,

Wal-Mart misleads customers about the
percentages of goods it buys locally to hide
its deep dependence on imports. For
example, Wal-Mart claims that 80-90% of
goods sold in their Canada and Mexico
stores come from local sources, but this
means local suppliers or transporters, not
just local producers.6 In fact, Wal-Mart
Canada has been forced to admit that, of
all the goods Wal-Mart sells in Canada,
only half of that 80 percent are made
“entirely in Canada.”7
Initially, Wal-Mart sourced its products
from America. However, the company
began to pressure its suppliers to produce
goods at the lowest price possible, forcing
them to move production overseas,
especially to China. In 1995, 6% percent
of Wal-Mart’s total merchandise sold in
the United States was imported.8 Today
60% of its total merchandise is imported
from more than 6,000 suppliers in 63
countries, with China at the top of Wal-
Mart’s supplier list.9
The Closing of Small Businesses
Wal-Mart claims that it does not hurt small
businesses, yet in Puerto Rico, between
1993 and 2002 some 130 businesses went
bankrupt because of the expansion of large
chain stores on the Island, and of those,
two-thirds were attributable to the growth
and expansion of Wal-Mart.10 Eight Latin
American countries—Mexico, Puerto
Rico, Costa Rica, Argentina, Dominican
Republic, Brazil, Uruguay, and Chile—
joined together to condemn the ‘predatory
6 Latin Trade, 08/03 and Canada Newswire
10/28/04
7 Stratford Beacon Herald (Ontario), 6/10/05
8 Frontline interview with Gary Gereffi
9 Morgan Stanley, 03/04
10 El Nuevo Dia, 3/21/05 and 9/11/05
practices’” of Wal-Mart on a global level.
Some wrote laws to prevent the retailer
from having a high concentration of
business in their countries. For example,
in Argentina provincial lawmakers passed
legislation that no business could control
more than 30 percent of the market in one
sector. In Mexico, where Wal-Mart gained
control of more than 50 percent of the
market in less than 10 years, they are
evaluating laws to protect domestic
businesses.11
The retail industry in India is already very
crowded. Wal-Mart’s entry will destroy
small mom-and-pop shops. India’s retail
sector is already the second largest
employer after agriculture, employing
about 10 percent of the labor force.
According to global consultancy firm A.C.
Neilson, India had the highest shop
densities in the world. In 2001, it was
estimated that there were 11 outlets for
every 1,000 people.12 Wal-Mart’s entry to
India could devastate the small traders and
their employees.
11 Logistics Today,


12 Atimes, 1/31/04,