Tuesday, November 29, 2005

Wal-Mart goes to India

Terms of endearment
ND Batra

From The Statesman

West Bengal chief minister Buddhadeb Bhattacharjee was reported to have asked at a meeting of business leaders in October, “Why do we need Wal-Mart to come?” That’s a good question, which Wal-Mart has yet to answer.

There is a genuine apprehension that small shopkeepers and intermediaries would be adversely affected by the arrival of the global retailer, as it has happened in many places in the USA where many mom-and-pop corner stores have shuttered down and others are struggling to survive.

“The High Cost of Low Price,” a recently released documentary by Robert Greenwald shows the seamy side of the retail giant, including the denial of health coverage to employees, exploitative wages for women and the elderly, ethnic and gender discrimination and many other not so legal practices, for which ultimately the taxpayer bears the burden.

Small entrepreneurs are the backbone of the Indian economy as well as the burgeoning middle class; and they must not be savaged. Nonetheless, they need to be exposed to the challenges of globalisation, to Wal-Mart’s organisational innovations.

Fortunately the retail space in India, unlike in the USA, is expanding rapidly and something like Wal-Mart is going to occur with or without Wal-Mart. Talking with analysts in June, John Menzer, president and CEO of Wal-Mart’s international operations, said: “India represents a $250-billion retail market, growing 7.2 per cent a year, but modern retailing is just starting to emerge.”

India is not only “a huge organic growth market for Wal-Mart”, but also a fast growing outsourcing market, with expected $1.5 billion merchandise export to Wal-Mart’ stores this year. But that is nothing what Wal-Mart exports from China, $70 billion annually, and has created myriad entrepreneurial opportunities by establishing a most modern supply chain system.

Chief minister Bhattacharjee should focus on not only how Wal-Mart treats its employees, keeping in mind that in the USA the retailer does not encourage unionisation, but also whether Kolkata could be another outsourcing hub for the hungry giant global with 2,000 worldwide stores, including 40 in China.

When small things aggregate, they bring about great changes. The world’s biggest retail giant, Wal-Mart sells almost everything and at the lowest prices, providing low and middle-class people affordable access to goods which would have been otherwise beyond their monthly budgets. The retailer is able to do so by buying massive quantities from inshore and offshore sources and hiring people at blood and sweat wages, mostly women, and that should be of great concern to political leaders like Mr Bhattacharjee and others.

In the long run, such business practices may have greater impact upon the world than Al Qaida, tsunami and the earthquake. As Nelson Liechten-stein, professor of US labour history at the University of California, Santa Barbara, wrote in the Globalist, “Wal-Mart rezones our cities, determines the real minimum wage, channels capital throughout the world — and conducts a kind of international diplomacy with a score of nations.”

As the retail giant scrounges and sponges the Third World for cheap goods, in the process it creates employment for hundreds of thousands of people in developing countries, especially China. In the USA, it keeps overheads low by hiring mostly female workers at wages much less generous than it pays to its male employees.

In 2001, six women said to Wal-Mart, this is discrimination against women and you can’t do it. Six women snowballed into more than a million current and former women employees who in a class-action suit charged that Wal-Mart, one of the nation’s largest employers, paid less and gave fewer promotions to women than to male employees. In the land of presumed equality, this is a serious accusation and has become a public relations disaster.

And the US district court judge, Martin J Jenkins, found that the plaintiffs did “present largely uncontested descriptive statistics which show that women working in Wal-Mart stores are paid less than men in every region, that pay disparities exist in most job categories, that the salary gap widens over time for men and women hired into the same jobs at the same time, that women take longer to enter management positions, and that the higher one looks in the organisation, the lower the percentage of women.”

Gender and race-based discrimination is an anathema in American society; and that’s how it should be in India, whenever a foreign company is allowed to do business. This is, however, not the first gender-discrimination class-action suit against corporate America. Home Depot, Texaco, Coca-Cola, Public Super Markets and many others were hit with class-action suits for discriminatory employment practices and paid millions of dollars in settlement.

A legal and humanitarian precedent set in the USA should be followed whenever Wal-Mart and other multinationals come to India, where local companies, too, should have no choice but to offer competitive opportunities to their female employees at par with what they offer to males: another consequence of globalisation. These should be the terms of endearment that political leaders offer to global corporations wanting to do business in India.

1 comment:

  1. $250-billion retail market of India is only roughly wal-mart's annual sales.

    Wal-mart imports around $17 billion from China each year. Not $70 Billion. Totally different numbers.