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Ethiopia’s government is famously protective of its economy, especially telecoms, banking and retail. So when the late prime minister, Marxist-influenced Meles Zenawi, met senior Walmart executives face to face last year, it might have seemed an incongruous pairing.
But rising food inflation, combined with traders hoarding goods to avoid government-imposed price caps, made the prospect of big stores arriving to deliver cut-price goods appealing.
Negotiations are continuing with the American giant under Meles’s successor Hailemariam Desalegn (pictured). But progress is slow.
Last year, the Indian government loudly opened up the multi-brand retailing industry, allowing foreign investors to hold up to 51 per cent in companies.
But the euphoria was short-lived. Very soon, it emerged that states would approve the reforms individually and the policy would have to go before India’s very stroppy parliament.
Now, the government has begun clarifying the rules – and, for foreign investors, things look every more difficult.
India’s Congress-led government has approved foreign direct investment in retail, paving the way for the US-based retailer and its rivals such as Tesco and Carrefour to enter the market. The Indian Parliament gave its blessing to the policy, after contentious votes last week.
Most businessmen would be glad to be compared to Sam Walton, the US retail visionary who founded Walmart. Not Sergei Galitsky, the billionaire chairman and chief executive of Magnit, the Russian grocery chain. He thinks the flattery goes too far.
For a start, Magnit, although Russia’s biggest food retailer by stores and growing at breakneck speed, will never match Walmart in scope or size, he says. And Galitsky has no plans to follow the US multinational’s example and take his company global.
It ain’t about any (alleged) bribery. It’s about the boxes. That’s the word from Walmart, the big box retail behemoth, on why it’s slowing down new store openings in China, where it’s been struggling.
As allegations of bribery in Mexico hang over its annual meeting on Friday, a top Walmart executive said it was cooling expansion in China to make sure it could find plain old box-shaped stores, which shoppers like, and no geometrical oddities.
The allegations, published in the New York Times over the weekend, that Walmart de México paid bribes to local officials to gain permits to build new stores have shocked markets and spooked investors.
The company’s share price plunged more than 12 per cent on the local stock market on Monday, wiping out all of the gains it had achieved so far this year. But should people really have been all that shocked?
On Friday, a South African court dismissed appeals from three government departments and unions to have the deal – which will see the US giant take a 51 per cent stake in Massmart – re-examined. The one victory for those who instigated the court action was the ruling that 500 workers cut from Massmart just before the merger be rehired.
Speaking about acquisitions at an investor conference, Cathy Smith, chief financial officer of Walmart’s international business, said: “There are whole provinces in China that we haven’t even begun to think about, so we would think about those kind of things there.”
One of the founders of X5, Russia’s top food retailer, has decided to leave his job after disappointing results and warnings that the days of dizzy sales growth are over.
X5, which has built a network of more than 3,000 food stores from scratch since 1998, like any highly successful start-up, has become just too big to continue growing so fast. But the slowdown is worrying investors who have seen X5 as one of the few non-resource companies in Russia worth putting their money in.
William Fung of the Hong Kong based sourcing company for US retailers like Walmart Stores predicted in January that Chinese-led deflation in consumer goods was over. He predicted rising wages in China would feed through to consumers in the west if suppliers like his company, which sources more than half its production from China, could pass on their cost increases.
It turns out they can. Research by New York Fed economists Mary Amiti and Mark Choi shows the cost of consumer goods imported to the US from China rose by 7 percent between the second half of 2010 and the first quarter of 2011. The double-digit wage increases for workers in south China are starting to flow through to western consumers.
Shares in Massmart, the South African retailer, climbed on Monday after the competition commission recommended that its $2.4bn takeover by Walmart be approved without conditions. The decision brings the giant US retailer a big step closer to securing a 51 per cent stake that would give it a foothold on the high-growth African continent.
The deal now needs final approval from South Africa’s competition tribunal, but with that looking like a formality Massmart’s shares were trading up 1.2 per cent in the early afternoon on Monday, bettering a 0.3 per cent rise in the main Johannesburg index.
Walmart’s attempt to tap into African markets was boosted on Monday after shareholders of Massmart, the South Africa retailer, overwhelmingly approved the US group’s bid to take a majority stake in the company.
The deal, which would see Walmart pay 16.5bn rand ($2.4bn) for a 51 per cent stake in Massmart, still has to be approved by South Africa’s competition authorities, but analysts are confident it is all but done and dusted.
Walmart has made much of the performance of its emerging markets businesses during the third quarter – reporting sales growth of 12.4 per cent in Brazil, 10 per cent in Mexico and central America, and 15.2 per cent in China. And rightly so, because a good part of this growth is driven by new store construction, with the retailer adding 79 stores in Brazil over the past 12 months, 32 new stores in China, and a huge 256 new stores at Walmart de Mexico, which include scores of new small convenience stores.