Like two lumbering elephants at the start of the mating season, Wal-Mart and the Government of India are eyeing each other, a little hungrily, a little warily. The dance has begun, and though the ultimate outcome seems clear, the process to get there could be plenty circuitous. HereÂ’s a Standard & PoorÂ’s update, published this month on the Business Week website:
Wal-Mart stated on Feb. 2 that it has applied to create a separate entity in Bangalore devoted to “market research and business development in relationship to the retail industry in India.”
“I think that has been no secret that we think the market opportunity in India is really outstanding,” Wal-Mart spokeswoman Beth Keck told the Associated Press on Feb. 2.
You don’t say. However, the government is playing hard-to-get:
The Indian government opened the doors of its retail market to 51% foreign direct investment (FDI) two weeks ago. But this most recent economic liberalization applies strictly to companies that sell goods through single-branded stores. The partial allowance permits a direct majority ownership interest by foreign entities, which, we think, is good news for many of the world’s marketers of top labels.
In S&P’s view, the widely anticipated FDI policy for limited retail investment, however, effectively slams the “Closed” sign on big-box chains and particularly Wal-Mart, feared by India’s Communist party as potentially putting mom-and-pop stores out of business by sheer virtue of its size. The retail behemoth rang up slightly more in retail sales for the year ending January, 2005, than the entire Asian subcontinent sold to its population of more than 1 billion Â…
But Wal-Mart wonÂ’t be easily dissuaded. Just ask the Mexicans:
Wal-Mart’s experience in emerging markets is the crux of its battle plan. Bentonville has been down this path of limited investment in retail before. Not too long ago, it battled anti-FDI sentiment in Mexico. In S&P’s view, Wal-Mart won that battle. It is now the biggest private employer in Mexico and operates more than 780 stores in that country.
On the positive side, all the eccentric uncles with the ear hair and the roving eye can soon get jobs as People Greeters. I can see it already. “Velcome to Val-Mart,” with a waggle and a smile… Continue reading

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