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| Wal-Mart drops ambitious plan |
| Wal-Mart drops ambitious plan for India
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| INDIA
, 10-October-2013
4:42:49 AM |
| Wal-Mart Stores gave up on India's huge market on Wednesday, announcing that it had indefinitely delayed its once-ambitious plans to open hundreds of superstores across the country.
The announcement adds to the gloom enrobing the Indian economy. Growth has sharply slowed and the value of the rupee has fallen starkly in recent months. It also suggests that the government's efforts to lure more foreign investment are failing, but the governing United Progressive Alliance's plan has never been popular with India's politically vocal retailers.
Wal-Mart, the Bentonville, Ark., company that is the world's largest retailer, also announced that it was ending its joint effort with Bharti Enterprises of India to operate 20 wholesale "cash-and-carry" stores that sell to other businesses like retailers, hotels and restaurants. Wal-Mart plans to buy Bharti's 50 percent stake in the venture, and the two companies will operate independent businesses in India. That Wal-Mart kept the wholesale business, long seen as a way to learn about India's fragmented retailing sector, suggests that the company has not entirely ended its hopes of eventually selling at a retail level.
In 2007, Wal-Mart announced with great fanfare that it planned to open along with Bharti "hundreds" of stores, the kind of ambitious proposition that many international companies hatched early in the century as hopes blossomed that India would soon join China as an emerging economic colossus. But many of those same companies have shelved their expansion plans after complex market conditions - fitful electricity, poor roads and government ineptitude - frustrated hopes of rapid profits.
Wal-Mart's chief executive for Asia, Scott Price, said this week that the Indian government's regulations requiring foreign retailers to buy 30 per cent of products from local small and midsize businesses were the "critical stumbling block" to opening its trademark consumer stores.
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