Wal-Mart (WMT): India A China Foil

August 7, 2007 by Douglas A. McIntyre

First, Wal-Mart (WMT) announced a joint venture with India retailer Bharti Enterprises to begin opening stores in India. But, that was not he end of it.

Today, Wal-Mart’s man in India said that the company would start to source more of its goods from the world’s second most populated country. “Today Wal-Mart is sourcing over $600 million of products from India directly , he told Reuters. He said the value of the largest retailer’s purchases there could begin to grow at 3x to 4x. Big numbers.

India may be a good market for WMT, but right now local law does not permit it to compete directly with the many local companies, which make up the country’s $350 billion in retail sales.

Wal-Mart has another reason to be in India. That is China.

The US retailer buys billion of dollars of goods from the Asian country and has a over 850 stores that. That number is growing. But, so is the extent to which the Chinese communist government meddles in WMT’s business. The company has already had to agree to allow its workers to join a union connected to the government and allow a branch of the party to exist within the walls of its stores.

China may represent Wal-Mart’s best growth opportunity, but a counter-balance, especially for sourcing billion of dollars in merchandise each year may keep the Chinese honest.

Douglas A. McIntyre