August 22, 2005

China and Corruption

Wal-Mart's quick expansion into China has led me to wonder how long they can go without using bribery and kickbacks, which are apparently pretty common among executives of American technology companies operating in China. (The article has nothing to do with Wal-Mart).

Posted by Kevin at 8:28 AM

August 21, 2005

Always the Lowest Prices in the UK?

Wal-Mart doesn't always have the lowest prices in the U.S., and Asda is not always Britain's lowest price supermarket, and it must not say so in its ads, since a single basket of 33 goods used to buttress the lowest price claim is not representative of the tens of thousands of goods sold by supermarkets in the UK.

Posted by Kevin at 10:08 AM

August 16, 2005

Seiyu to Open WM Branded Stores in Japan

Count me as skeptical of the effectiveness of the new stores:

TOKYO (AFX) - Seiyu Ltd will start opening stores in 2006 developed with Wal-Mart Stores Inc, its top shareholder, and carrying the US retail group's brand, The Nihon Keizai Shimbun reported without citing sources.

By introducing the store development methods of Wal-Mart, its 42.4 pct shareholder, Seiyu aims to turn around its business, the business daily said.

Wal-Mart plans to turn the struggling Japanese retailer into a subsidiary as early as this year.

Posted by Kevin at 9:43 PM

August 2, 2005

John Fernie

John Fernie, Head of School of Management and Languages and Professor of Retail Marketing at Scotland's Heriot-Watt University, has an interesting powerpoint presentation, The Impact of Wal-Mart in European Markets, that draws on personal interviews and survey data from Wal-Mart shoppers in Germany and the UK. The skinny: WM is much better off in the UK than in Germany.

See also his article, Play it Again Sam.

Posted by Kevin at 4:31 PM

July 29, 2005

That 70%

I would like to thank Kevin for pointing to the thread so that I could start a flame war(it was really bad day already). Mr. Massengale seems to not want to beleive that their is contradictory evidence to suggest that the number is wrong. If it was on Frontline, it must be true right? This flies in the face of what has been repeatedly published as Wal-Mart's imports from China and also the total amount of goods sold each year. The two numbers simply don't justify the often quoted 70% of goods at Wal-Mart being from China.

Now there is a Ted Fishman who makes a different claim, that being 70% of all goods at WM stores have a Chinese component of some sort. He made this claim supposedly in his book China Inc. This a is different assertion and I sent an email asking for verification and confirmation. I originally saw this at Wal-Mart Watch included in paragraph mentioning a dubious source of the fact 70% of all goods are from China.

In addition, I emailed a Sociologist from Duke University who was quoted in the Frontline piece and who Mr. Massengale also emailed and got a response. Professor Gereffi had written in his response that the often quoted trade number could 2 or 3 times larger because of indirect imports. That is products are imported by an American company rather than Wal-Mart directly. I will note that the published trade number is often mentioned as inluding both direct and indirect imports. Even taking, the 2 or 3 times number we still don't get near 70%. Also in his reply to Mr. Massengale, he claims that only 60% of WM goods are imported in total, directly contradicting the assertion that 70% are from China.

I have been searching far and wide for the origin of this number and have yet to find a seemingly reliable source. The closest I have come is to Mr. Fishman. Also, it is disappointing that no trade economist has taken this issue up. Much of the commentary isn't by economists at all, but rather sociologist. I had read through some the research on Professor Gereffi site and while it is very interesting work and applicable, we still don't seem to have reliable numbers nor research.

In the meantime, I'm going through some of my Investment Banking contacts to see what they have written. With the recent RMB revaluation, someone will have done work to see how this affects Wal-Mart.

Posted by Bob at 1:31 PM

July 1, 2005

International Aquisition?

I found this article on Yahoo which looks like it is orignally from It picks up on the previous post concerning what might have been a shopping trip by Lee Scott:

In an interview over the weekend with the Financial Times, Wal-Mart CEO Lee Scott said the company was looking at acquisition opportunities in India, Hungary, Poland and Russia. "Something could happen next month [or] in six months," Scott told the paper.

A company representative sought to play down Scott's comments.

"I don't think [CEO Scott] was trying to signal anything specific," said Wal-Mart spokesman Bill Wertz. "We're not tipping our hand."

Still, the fact that Wal-Mart might be heading on an international shopping trip is a dramatic shift for the retailer, which has entered only one new market since ending its initial, multibillion-dollar acquisition spree in 1999.

Furthur down in article, it mentions that many Eastern European retailers who would potentially be a good fit are already owned by the Wal-Mart's Western European rivals.

Posted by Bob at 1:43 AM

June 21, 2005

Time on WM in China

A nice overview of both stores and procurement in China. It includes this section on which jobs Wal-Mart is destroying:

Only about 10% of the firm's purchases from 2,500 suppliers in China today come from companies owned on the Chinese mainland. Andrew Tsuei, managing director in charge of Wal-Mart's global-procurement operations, says the rest come from longtime suppliers in other parts of the world that have moved their manufacturing to China in search of lower costs. That means Wal-Mart's China trade may indeed be eliminating factory jobs--but in South Korea, not South Carolina.
Hmmm... That doesn't really follow, since non-US/non-China based firms could have been producing goods in the U.S., but it was a nice try...

Posted by Kevin at 12:20 PM

June 13, 2005

China Merchandising

Ashwin Navin of ash was here is surprised to find that Wal-Mart has different standards for what they'll sell in China:

While wandering down the isles of this megastore, i was curious about the retail price of Hollywood movies and music -- especially since the same titles are available literally one block outside the door for $1 on the street (pirated of course). to my surprise, i discovered a wall of porn! not segmented by curtains or velvet ropes, but literally right above the children's movies... isn't this the same retailer that makes american magazine publishers change its covers to get shelf space in america's favorite family store??

Thanks to Barry Ritholtz at

Posted by Bob at 2:47 AM

June 7, 2005

It's Sexy to be Overseas

Wal-Mart's 5-Year Plan includes massive overseas expansion, and John Menzer's Hot on India. But Target wants to focus on the domestic market:

Meanwhile, Target expects to add more than 600 stores over the next five years, the company told shareholders at its recent annual meeting.

During a May 12 conference call about its first-quarter earnings, one analyst asked Target about rumors that it might link up with Tesco to grow overseas. But Target said there is still growth to exploit stateside.

"We know we can double the number of stores in the continental United States," and factoring in existing stores' sales growth will "lead us to be able to triple in size in this country," Target CEO Bob Ulrich said.

"It's sexy to be overseas, but there's a strong return for our strategy here, so I think overseas is still a ways off."

Posted by Kevin at 10:09 AM

June 2, 2005

New WM in Beijing Sells Black Market DVDs? (UPDATED)

Frank Yu describes his experiences in a new WM in Beijing, interspersed by relevant quotes from Star Wars movies. Frank had a great time, but he became suspicious that Wal-Mart was selling bootleg DVDs:

One chilling discovery during the visit came when we went to investigate the DVD movie selection aisle on the first floor. Along with the usual local Chinese movie DVDs encased in hard plastic box packaging, there were also foreign DVDs polywrapped in plastic with simply the cover sheet and the DVD inside packaged in the same manner that pirated DVDs were sold in China. Most surprising of all was that the price of Disney�s Dumbo was only about 6 yuan(that's less than 1 USD). Pirated DVDs from other Beijing stores cost about 10 yuan while poor-quality street versions cost about 8 yuan. These DVDs were cheaper than the pirated versions sold around Beijing. I cannot confirm if those in the store were actually legitimate or not, but given the price and packaging I would make a guess that they were not. I should not be surprised since pirated DVDs have been found to be sold in Chinese post offices and government buildings by vendors who set up a table inside. Since almost all retailers in Beijing seem to do the same thing as well, one gets desensitized to the practice until you realize that this is Wal-Mart.
If the DVDs are legitimate, then Wal-Mart is undercutting the prices of movie pirates, which is simply astonishing.

UPDATE: In the comments, Frank, the author of the linked article, notes that he has posted a photo of the DVD shelf in question. Thanks, Frank!

Posted by Kevin at 8:19 AM

May 27, 2005

Some Chinese Want to Buy Wal-Mart?

This bizarre article on China Economic Net considers the plan for the Chinese to buy Wal-Mart. Really:

Recently some Chinese experts have put forward an idea that Chinese enterprises could become Wal-Mart's shareholder by strategically purchasing its stocks and by this way setting up a most facilitative channel for Chinese commodity". This suggestion immediately incurred strong oppositions...

For those who put forward the idea of "acquiring Wal-Mart", they think that Wal-Mart has perfect corporate governance structure and sound management, therefore it is a rational anticipation for Chinese side to share the enormous profit brought by Wal-Mart.

It is true that the smooth performance of the whole Wal-Mart system relies on its perfect procedures and an outstanding management team. However, by now in China there has been no such management team that can run Wal-Mart, which makes the idea of acquiring Wal-Mart a dream that can't come true. If now Wal-Mart were acquired by Chinese, it could be anticipated that Wal-Mart go broke within a period of 3 or 5 years....

The proposal put forward by domestic experts is established only from a seller's point of view, which put emphasis on acquiring Wal-Mart as a distributing channel to directly "dump" Chinese products. However, it will ruin Wal-Mart.

Posted by Kevin at 10:22 AM

May 15, 2005

More Pics of Wal-Mart in Korea

Each store in Korea has a thumbnail image in the stores section of I like the Kangnam and Anyang Pyungchon boxes the best.

Posted by Kevin at 3:21 PM

May 11, 2005

Seiyu Issues WM $95Mil in Shares

Wal-Mart will soon own 42% of Seiyu:

TOKYO - Japanese supermarket operator Seiyu Ltd. said Wednesday it will issue about $95 million worth of new shares to Wal-Mart Stores Inc.

The move will boost the U.S. retailer's stake to 42 percent from 37 percent in Tokyo-based Seiyu, which operates about 400 stores nationwide.

The purpose of the new share issue is to strengthen Seiyu's capital base by raising funds to be used for yet-to-be-specified general business projects, Seiyu said.

It might actually break even this year.

Posted by Kevin at 1:18 PM

Goings on in India

John Menzer will meet with Indian politicians and bureaucrats... The press asks: Will Wal-Mart enter the 97% mom-and-pop dominated Indian retail market? Will Wal-Mart increase Indian sourcing by 30%?

Posted by Kevin at 1:16 PM

April 18, 2005

Chinese Dominance of Textiles: Winners and Losers

Wal-Mart eliminates jobs in the U.S. because of its ability to get suppliers to shift production to lower cost areas. On the one hand, the U.S. has handled this in a pretty robust way. U.S. consumers have benefited from higher real incomes, and displaced workers, while feeling economic pain, have mostly shifted successfully to other work that supplies the additional purchasing power of the domestic and international consumer.

On the other hand, many developing nations are not handling this at all well.

Ivan Janssens discusses in detail the winners and losers of free-trade in textiles. The losers are those in nations whose governments pretended that industry protection created a real comparative advantage :

The real losers are elsewhere. The real losers are the textile workers in developing countries like Egypt, Turkey, Mexico and the Philippines, Bangladesh, Jordan and many African states. They used the textile sector as a major development tool, pushed that way by preferential trade agreements that gave textiles produced in those countries preferential access to developed countries and which assured their share in the world market.

The result is that those countries were �locked-in� into a sector which turned out to be uncompetitive. And it probably led to a less diversified economy. If so then the ultimate cause for all their troubles will have to be found in the preferential trade agreements themselves and not so much in their abolishment.

Related to this is that U.S. trade policy especially as conducted under the Bush-administration could also be a major loser. In the past years the Bush-administration has chosen to follow the road of bilateral and preferential trade agreements as well, bypassing as much as possible multilateral options like that of the WTO. This could all be well come tumbling down

UPDATE: In a later post, Ivan suggests that China success is partly the result of engaging in open trade, not unfair trade. He also notes that China imports from even lower-wage countires and does NOT complain:

Note the fact that the growth of China�s imports is mostly the result of products coming from other East-Asian countries and from commodities (oil...) coming from Africa and Latin-America. As a result many countries in Africa have posted their best economic growth rates in decades. Those countries in Africa have even lower wages but China is not complaining. So why should we?

Posted by Kevin at 9:24 AM

April 15, 2005

Tesco Outlook 2005

An interesting look at the big players in the UK grocery market for 2005. The skinny. Wal-Mart/Asda is #2, and is likely to stay that way:

Tesco appears to be on an unstoppable march towards victory in the battle of the supermarkets. This week it announced profits of overmore than �2bn for last year � a record for a UK retailer.

The chain�s share price has responded in kind, up 26 per cent since March 2004, outperforming both its sector and the FTSE All-Share. Most analysts had a buy recommendation on the stock a year ago, and continue to do so now. But when the consensus is so overwhelmingly bullish, should investors be wary?

Tesco appears at times to do everything right. Whereas competitors like J Sainsbury or Wm Morrison (which bought Safeway in March 2004) are struggling, Tesco, with a nearly 30 per cent share of the domestic supermarket grocery sector, just goes from strength to strength.

I'll try to do more international blogging in the future.

Posted by Kevin at 9:44 AM

March 30, 2005

Will Wal-Mart Save Iraq?

GOP Vixen sets out her plan for a peaceful, democratic Iraq:

Step One: Welcome to your friendly neighborhood Baghdad Wal-Mart! Encourage democracy through discount shopping. Who would want to roll car bombs down the street when you're rolling back prices down at the supercenter...

As an added bonus, Saddam�s legendary information minister �Baghdad Bob� can be the country�s first Wal-Mart greeter, lying to store guests about which aisle harbors the Charmin.

Posted by Kevin at 11:28 AM

March 23, 2005

More Opposition in Mexico?

Without citing any evidence, Reuters tells us that opposition to Wal-Mart is increasing in Mexico.

The fight against the discounter is inspired by successful challenges on Main Street, USA. In Mexico, though, resistance is spiced with national pride and no small dose of bitterness left from foreign conquest centuries ago.

"They fool us like the Spaniards did," said Patzcuaro printer Marco Antonio Garces. "They don't come on horseback, but they dazzle us with automatic doors and air conditioning. They'll trade Chinese junk for what little we have."

To Guadalupe Loaeza, a newspaper commentator and self-confessed Wal-Mart shopper, such talk sounds misplaced in a country where citizens toss garbage into the street and pay little mind to preservation.

The rhetoric really reflects Mexico's love-hate relationship with its powerful northern neighbor, Loaeza said.

"More and more, we import lifestyles resembling the American way of life," she said. "We feel seduced, and at the same time threatened."

In the past decade, Wal-Mart de Mexico, or Walmex , has become the nation's No. 1 retailer and largest private employer. It now has almost 700 stores and restaurants, using aggressive expansion and low prices to take business from established supermarkets.

"It's the convenience," said Leticia Aguirre, who welcomes Wal-Mart. The Patzcuaro mother of two chalks up opposition to sheer self-interest on the part of local merchants. "They're afraid the competition will be strong," she said.

As Wal-Mart enters tougher markets, the organization of its opposition is increasing, and the voice of those opposing is louder, but perhaps sentiment across the Mexican population has not changed at all. But isn't widespread sentiment what is generally thought of as opposition to Wal-Mart?

Posted by Kevin at 11:55 AM

South Korea Gov't Goes After Big Retail

JoongAng Daily reports:

E-Mart was fined 220 million won; HomePlus, 120 million won, and Carrefour, 99 million won. Lotte Mart and Wal-Mart received orders to correct their dealings with their subcontractors.

According to the antitrust agency, E-Mart, HomePlus and Wal-Mart returned goods worth 1.8 billion won to their subcontractors without a reasonable explanation.

It also said Carrefour and HomePlus took advantage of ambiguity in their arrangements with their subcontractors to force them to do whatever they wanted, such as set up displays.

Separately, the agency also said E-Mart and Lotte Mart was guilty of false advertising.

WM looks pretty clean compared to its competition...

Posted by Kevin at 11:47 AM

March 21, 2005

Asian HQ to Move to Shenzhen

From the sometimes amusing Xinhua:

The new building will be put into use by August 2006, said DingLiye, general manager of the company.

Ding said besides Shenzhen's location neighboring Hong Kong, support from its Chinese partners and local government also helped Wal-Mart decide to move its Asian headquarters.

Wal-Mart has opened more than 40 outlets in major Chinese cities, including Shenzhen, Beijing, Harbin and Nanjing, since its entry into China in 1996. The retailer employs more than 20,000 employees in the country.

Posted by Kevin at 11:06 AM

March 10, 2005

Carrefour Pulls Out of Japan

But Wal-Mart remains:

Domestic media reports said Carrefour, which is due to announce its full-year earnings in Paris at the same time as Aeon's news conference in Tokyo, would likely sell all eight of its Japanese stores to Aeon for about 10 billion yen ($96.17 million).

The expected pullout is evidence of the difficulty that bulk-selling foreign entrants such as rival Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) have had in cracking Japan, where famously fickle consumers buy whatever they need in small amounts every few days.

Carrefour has also struggled to overcome weakness in consumer spending since it entered the Japanese market in 2000.

The sector still faces flagging sales, with overall supermarket store sales in Japan down 3.5 percent last year and a 0.7 percent fall in same-store sales at convenience store chains, industry data shows.

Wal-Mart, the world's No.1 retailer, has struggled in Japan and its affiliate Seiyu Ltd. (8268.T: Quote, Profile, Research) appears to have not yet adapted to the U.S. parent's sales strategy, having reported losses for three straight years.

Once settled, Aeon will be developing even more hypermarkets in Japan.

Posted by Kevin at 11:00 AM

February 25, 2005

WM in Canada

Via the Eclectic Econoclast, and the Emirates Economist, we find a new Economist article ($$$$) about Wal-Mart in Canada:

WHEN Wal-Mart moved into Canada just over a decade ago, the American retailing behemoth arrived with a splash, buying 122 stores of Woolco, a foundering chain. It turned down the chance to buy ten further Woolco outlets, including what was reputedly the most profitable of them all, because their workers belonged to a labour union
The rest of the story requires a subscription. I'll report on the rest when my library gets the electronic edition...

Posted by Kevin at 3:12 PM

January 31, 2005

$1billion in Goods from India

It's forecasted that Wal-Mart's direct and indirect imports from India will increase to over a billion dollars in 2005:

It is $1.2 billion worth of home textiles, apparel, fine jewellery and housewares from Indian factories and suppliers during 2005, for world top retail giant Wal-Mart.

Last year the company sourcing from India stood stood at $300 million. All of it was directly sourced from factories and suppliers for Wal-Mart�s retail stores globally, inform a company statement.

Posted by Kevin at 12:02 PM

January 21, 2005

WM No Longer in Race for Daiei

We just told you that WM is a top contender to take over Daiei. Well, it seems Japan wants domestic ownership of Daiei, so Wal-Mart is out of the running:

Wal-Mart's bid for Daiei may have been hampered by its mixed success in turning around another Japanese retailer, No. 4 Seiyu Ltd., in which it is a major shareholder.

Wal-Mart's candidacy had been backed by trading house Sumitomo Corp., U.S. investment fund Cerberus, and U.S. investment bank Goldman Sachs (Research).

Posted by Kevin at 10:27 AM

January 19, 2005

Wal-Mart's Joint Chinese Venture with CITIC

Wal-Mart is now set to be a dominant player in the Chinese retail market:

HONG KONG (Reuters) - The world's largest retailer, Wal-Mart Stores Inc., will team up with CITIC Pacific Co. Ltd. to open hundreds of stores in China over the next five years, the Beijing-backed conglomerate said Wednesday.

Posted by Kevin at 7:20 AM

January 18, 2005

WM Goes After Another Japanese Retailer, Daiei Inc.

Already taking stronger control over Seiyu, WM is poised to take Daiei out of the hands of the Japanese government:

The winning bidder for the government- led rescue of Daiei Inc., Japan's third-largest retailer, may be the group that can invest most, analysts say....

Under the plan the IRCJ announced Dec. 28, the sponsors must be prepared to invest at least $588 million in Daiei....

Wal-Mart, the world's biggest retailer, has been trying to expand in Japan since it entered country in 2002 with a 6 percent stake in Seiyu Ltd., Japan's fourth-largest merchant.

Aeon and Ito-Yokado, Japan's No. 1 and No. 2 retailers, may not have Wal-Mart's financial stability to back Daiei as they struggle to bolster earnings amid nine straight months of falling retail sales...

Daiei, which runs 63 supermarkets and 182 general merchandise stores, said last month it will close 53 unprofitable outlets.

Daiei aims to cut its debt to $3.8 billion by February 2010, targeting $426 million operating profit -- sales minus the cost of goods sold -- in that year...

An optomistic forecast...

Posted by Kevin at 10:52 AM

January 11, 2005

WM Prepares to Enter Russia Through Turkey

When I noted that WM planned to buy into Migros Turk, a Turkish big-box chain, I failed to note that it is one of the largest retailers in Russia.

Doing business in Russia means one thing: extensive bribing of public officials at every level. That's how stuff gets done. Hence, times are good for officials as there is a booming commercial real estate sector in Russia.

Despite the growing number of projects in the capital, however, experts say development activity is gradually shifting to the regions, where returns are higher and competition is much lower.

"Retail chains are growing much faster than the Moscow construction market," said Maxim Gasiev, head of retail at Colliers International.

"This was the beginning year of true regional expansion," Kershaw said. "The year was average for Moscow, but truly exceptional for the regions."

In March, IKEA opened its first Russian store outside Moscow and St.Petersburg -- in Kazan -- and is planning to open stores in 10 other cities with a population of more than 1 million.

Turkey's Ramenka, which owns Ramstore supermarkets, in addition to opening several stores in Moscow, entered the St. Petersburg market in 2004 and is now also present in such regional cities as Krasnoyarsk, Rostov-on-Don, Kazan and Nizhny Novgorod.

Ramenka is 50% owned by Migros Turk, so WM would be buying into an expanding successful hypermarket business...

Posted by Kevin at 1:47 PM

January 10, 2005

Wal-Mart Clone in Finland

Finland for Thought recently posted on Wal-Mart in Finland, which is all about the nonreaction of Finns to a WM clone:

Wal-mart in the United States and Prisma/K-Citymarket are identical, they both are gigantic... But the two countries appear to have different attitudes towards them�

Americans have a �love-hate� relationship with Wal-Mart. They love to shop there, but hate to give their money to an evil huge corporation who causes smaller stores to close its doors.

�but I don�t see the same reaction in Finland.... Why isn�t Prisma & K-Citymarket looked in the same light as Wal-Mart in the U.S.?

Let's examine that last question; is Wal-Mart actually considered evil by most Americans?

1) In the U.S., right-wing radio personalities do not talk about Wal-Mart at all. (That's my experience, please correct me if I'm wrong). The attack on WM is an attack almost always from the left, including the religious left. And it is up to "the left" to substantiate claims that most Americans dislike WM or have a love-hate relationship with it. I'll grant that some do--let's say ten million do. That is 3% of the population--not most Americans. The onus is not on WM to show that people like it. It is not surprising that many small businesses, The Nation, PBS, Bill Moyer, and unions all agree that WM is bad; their own ideological and/or financial interests are opposed to WM's success. That WM protests at city council meetings are dominated by anti-WM activists is not at all surprising; what is surprising is that so many potential shoppers show up to defend WM. Either way, these anecdotes say nothing comprehensive about the median of American sentiment regarding WM. As far as I know, no serious study has demonstrated that there is an increasing anti-WM feeling among the population.

2) Here's a quick nonscientific poll of American sentiment. Technorati tracks around 5.8 million blogs. In the past 90 days, 53 bloggers have written "I love Wal-Mart" 123 bloggers have written "I hate Wal-Mart". You say, aha! That's over 2 to 1 against Wal-Mart. True, but 5.8 million bloggers have not written either. That's a ratio of 5,800,000 to 200 or 29,000 to 1. Alternatively, there were 33,000 posts that used the word "Wal-Mart" in the last 90 days; assume each of those blogs posted about WM only once, then for every blog that wrote about Wal-Mart, 175 didn't. Regarding WM, indifference dominates the American temperament.

3) Frankly, most Americans are not in a love-hate relationship with any political party, corporation, union, charity, church, government, etc. That does not describe the American temperament, which I would say is more aptly described by "most Americans just live their lives". It is not true that most Americans "hate to give their money to an evil huge corporation" that closes smaller stores. Wal-Mart does not close smaller stores by merely opening its doors; Americans who prefer to not shop at smaller stores force smaller stores to shut down by shopping at WM.

4) In general, Americans do not hate evil huge corporations. Granted, a vocal minority does. But most Americans love their cars (produced by evil huge multinational corporations), and many are strangely fond of their Japanese-American-German auto brand; most Americans eat at evil huge international food chains like McDonalds.

Finally, the extremely strong role of trade unions in Finland--to the point where the have a major impact on economic decisions, means there is little union muckraking in Finland regarding the WM clone. In 2000:

The trade unions in Finland play the key role in preserving the interests of big business against those of their members. The SAK, the largest trade union federation, which mainly organises manual workers, has 1.1 million members out of a total workforce of around 2.4 million people. The STTK white-collar union federation has 655,000 members, and the federation of academic professionals' unions has 375,000 members. Taken together this gives a figure for union membership of around 80 percent, similar to the rest of Scandinavia, and far in advance of most other countries in the world. Many unions also have significant student, unemployed and retired memberships.
The real hatred for WM in the U.S. is the labor-left's disgust at WM's success at keeping away unions, and competition with unionized stores...

Posted by Kevin at 10:54 AM

December 29, 2004

WM in Turkey (UPDATED)

There's a rumor floating around that Wal-Mart is interested in a sizable stake of Migros :

Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) , the world's biggest retailer, declined to comment on Wednesday on reports that it was in talks to cooperate with Turkey's leading local retailer, supermarket chain Migros (MIGRS.IS: Quote, Profile, Research) .

Shares in Migros, controlled by Turkish conglomerate Koc Holdings (KCHOL.IS: Quote, Profile, Research) , jumped 7.5 percent on Wednesday after the Turkish Anka News Agency quoted Koc Honorary Chairman Rahmi Koc as saying Migros and Wal-Mart were in talks.

"We do not comment on this kind of speculation," said Wal-Mart spokesman Bill Wertz.

Wertz said Wal-Mart had no particular policy regarding operations in Turkey but the Bentonville, Arkansas-based company was always interested in growth internationally.

UPDATE: It's true:
Former CEO of the Turkish Koc Holding Rahmi Koc confirmed that US retail giant Wal-Mart is in negotiations with Migros Turk, the Turkish supermarket chain, 'Zaman' paper reported....

Koc Holding officials commented that it is normal for Migros Turk to negotiate with various leading companies of the international retail market.

Posted by Kevin at 3:41 PM

December 28, 2004

How to Oppress Third World Farmers--Please Consumers

An extensive New York Times article has WM and other antagonists oppressing third world farmers by stiffing co-operatives and requiring advanced farming methods:

cross Latin America, supermarket chains partly or wholly owned by global corporate goliaths like Ahold, Wal-Mart and Carrefour have revolutionized food distribution in the short span of a decade and have now begun to transform food growing, too.

The megastores are popular with customers for their lower prices, choice and convenience. But their sudden appearance has brought unanticipated and daunting challenges to millions of struggling, small farmers.

The stark danger is that increasing numbers of them will go bust and join streams of desperate migrants to America and the urban slums of their own countries.

But it's actually supermarkets in Latin America that have upped the standards production and distribution:
To enter the supermarkets of Guatemala's dominant supermarket chain, La Fragua - part of a holding company one-third owned by Ahold - is to understand why Professor Reardon likens them to a Trojan horse for foreign goods.

At La Fragua's immense distribution center in Guatemala City, trucks back into loading docks, where electric forklifts unload apples from Washington State, pineapples from Chile, potatoes from Idaho and avocados from Mexico.

The produce is trucked from here to the chain's supermarkets, which now span the country. Scenes at a mall in Guatemala City anchored by Maxi Bodega, one of the company's stores, suggest the evolving nature of grocery shopping for Latin America's 512 million people.

The bottom line:
Farmers who do not or cannot afford to change fast enough to meet the standards set by supermarkets are threatened.
However, the article wants to imply things are worse than they really are. :
The number of people living below poverty lines in Latin America has risen from 200 million in 1990 to 224 million this year. More than 6 in 10 people living in rural areas are still poor.
While the number of poor people rose by 24 million from 200 to 224 million, the number of people rose 68 million from 432 to 500 million, so the poverty rate decreased from 200/432=46.3% to 224/500=44.8% (presuming we're talking about LA and the Caribbean).

Posted by Kevin at 3:54 PM

December 23, 2004

Dave Meleny on Wal-Mart in China

Dave Meleney leaves a superb comment to this post. Read it!:


Shopping in China has been changing rapidly, a full openness to WalMart and Home Depot will send it all into hyperspeed. When I was doing small home repairs there 15 years ago I had to go to an amazing number of shops to get a few plumbing items. Most stores were manned by listless government employees who'd often say: "Mayo" (we don't have any) to any request, even when the goods were right in front of you. And where the private stores were very eager to please but wouldn't think of western habits like standing behind their products. Someone spending half a years salary on a bike better check it out very, very carefully...

Now they are jumping fully into a competitive model where exchange doesn't require establishing personal relationships, where every ounce of fat is constantly being pared from the distribution process, and where the producer knows what products left the store shelves that very night.

A culture that has largely skipped the wired phone and gone straight to cell technology, that is producing several times the engineering graduates of any other country in the world, and that now is mainlining Sam Walton's urgently efficient ethos is soon going to be coming up with hi tech innovations that revolutionize the way our children live. Instead of getting SARS and new forms of flu from Guangdong province, we'll be getting cutting edge biotechnology and cars that don't have accidents. No wonder that Ford Motor and Kay Jewelry, are starting to worry that WalMart may do to them what it did to Toys-R-Us. The true nature of the revolution is starting to become more evident.

Posted by Kevin at 12:03 PM

December 20, 2004

WM, a Monster let Loose in China

Today's best read--Sarah Schafer in Newsweek International:

In recent years Beijing had allowed foreign retailers to open stores in China, but only for chains with sales of more than $2 billion. That rarefied global group included only Wal-Mart, Carrefour of France (which Wal-Mart is rumored to be interested in buying) and the Metro Group of Germany. Last week Beijing opened the door to smaller players, and lifted rules that had confined the three giants to a limited number of cities and forced them to work with Chinese partners.
Just what will the monster do? Nothing less than revamp the entire Chinese business culture...
Wal-Mart is in effect trying to replace a Chinese business culture built on personal relationships with its own modern supply network, built on information technology. There's a long way to go. For every Huada, there are still many others that don't understand the proprietary software Wal-Mart uses to link with suppliers, and can't stop padding the bills to make room for bribes. Yet many analysts think Wal-Mart can prevail in this culture clash

Posted by Kevin at 4:05 PM

December 17, 2004

Improvements in Seiyu (WM in Japan)

The Financial Times has an excellent article on Seiyu, the Japanese discount retailer Wal*Mart owns 37% of:

At aSeiyu/Wal-Mart staff meeting, Masakazu Hattori, a senior merchandising director holds up an 80cm Christmas tree - the perfect size for space-constrained Japanese households.

According to the company's "Smart System" tracking software, the tree is selling fast at only three of Seiyu's 406 stores. At the others, not a single tree has been sold.

Mr Hattori excuses himself from the meeting and rings some stores. It turns out that at those where the tree has been selling well, it has been displayed decorated with lights and ornaments. At shops where none has been sold, it has stood unadorned and puzzled consumers have simply bypassed the strange-looking plastic plant.

The Christmas tree incident underlines an important point, says Jeff McAllister, chief operating officer of Wal-Mart Japan. Powerful as its IT systems are, they serve only as a preliminary step in uncovering the causes of problems.

Also very interesting is how the customers get to the stores:
"Today, since the majority of customers walk or take their bike [to our stores], if it rains, it has at least a 10-15 per cent impact on sales," says Mr McAllister. "[Predictive technology] will give us critical information, based on historical data, when it rains, here is what the customer buys and then ensure we get the product to the store in advance."

Posted by Kevin at 10:23 AM

December 12, 2004

Wal-Mart Looking at Shipping Line

Via Glenn, I find this post by the Politics of CP. It point to an article in the Arkansas Gazette which says that the company may be looking at acquiring APL, American Presidents Line. The company is currently owned by a company in Singapore, Neptune Orient Lines( On a side note, I remember when APL was bought out as it involved a suspicious order coming across my desk. Note to wannabe insider traders, don't attempt to buy position limit long call options a few days before the company is bought out. It's fricken obvious when a stock whose options don't trade on average more than a couple of dozen a day suddenly gets an order for 5000 or when the customer desk asks what the position limit is. This happened a few times and I would have loved to have jumped on it but it wasn't worth the potential hassle).

It is rumored that the company may be considering a purchase of a major container shipping outfit. Word out of Northwest Arkansas is that Wal-Mart is eyeing American President Lines (APL) for acquisition.

APL is one of the largest logistics and container transportation companies in the world. It has offices in over 80 countries, including 30 offices in China. APL's parent company, Neptune Orient Lines (NOL), is headquartered in Singapore.

In 2002, APL was named Wal-Mart's International Ocean Carrier of the Year. According to a company press release from 2002, "APL has been working closely with Wal-Mart for three years and provides services to Wal-Mart in 37 countries, shipping everything from electronic goods, footwear and garments, to household products and furniture."

With more imported goods making it onto Wal-Mart's store shelves, the retail giant will have to make sure it can get its goods out of production and into stores faster and cheaper. Acquiring a company like APL would give the company more control of that process. While transportation costs have spiked recently, sea freight unit costs have fallen by over 70 percent during the past 20 years.

Wal-Mart has invested heavily in its own logistic business. It currently operates one of the largest and most complex domestic shipping organizations in the world. It boasts more than 60 distribution centers throughout the U.S., a private fleet consisting of 36 transportation office terminals in 28 states, 5,600 tractor trailers in 48 states and 6,900 truck drivers.

This has implications for the west coast as the article points out. Reports out of Los Angeles-Long beach has that port struggling to keep up with the influx of goods coming in:

There is a lot of that going on at the nation's busiest port these days, as a glut of imports from Asia, a shortage of dockworkers and breakdowns in the harbor's infrastructure have created a tangled backlog in the midst of the peak holiday season.

The crowding is not expected to significantly delay Christmas shipments as additional hiring is starting to pick up the slack. But as the national economy continues to outsource manufacturing jobs, the explosive growth in imports is taxing the capacity of the nation's ports and its road and rail system, transportation officials said.

"That's really swinging the whole transportation system around. It's just overwhelmed the infrastructure and it's catching up and surpassing us," said John Bromley, a spokesman for Union Pacific Railroad Co. Hit with a large number of early retirements, Union Pacific recently began limiting the number of rail cars available to haul containers, creating delays beyond those at the ports.

In San Pedro Bay, dozens of ships are anchored, waiting as long as a week to be unloaded, up from the norm of less than three days. Cargo containers pile up in terminal yards waiting to be placed onto trucks or trains, as drivers like Vaca spend much of their day in line before leaving to navigate crowded freeways and more delays.

"We've been seeing double-digit increases in cargo every year. Everyone in the industry saw this coming, but we didn't prepare for it," said Steve Stallone, spokesman for the International Longshore and Warehouse Union, which represents dockworkers.

With volume increasing more than twice as fast as had been projected and other West Coast ports ill-equipped to handle a large influx of goods, Los Angeles-Long Beach, the largest U.S. container complex, is having to bear the brunt. Many of the ships coming from Asia are too big to make it through the Panama Canal to Eastern seaports. So the ships come in droves to Los Angeles-Long Beach and wait.

If the rumor is true, than the Washington Post article gives a solid rational as to why Wal-Mart is considering such an aquisition. In fact, it would just be an extension of the current logistics operation. If you thought the union flip out over Wal-Mart now, just imagine what would happen if this deal goes through. Some may remember the labor dispute a couple of years ago at the L.A.-Long Beach port, the big issue was over the introduction of productivity enhancing measures being introduced. These weren't even cutting edge at the time. What would happen if Wal-Mart insisted on the latest innovation at the ports they do business.

My hunch is though that this probably has as much to do with the companies international expansion plans and the creation of a seamless organization globally.

Posted by Bob at 5:06 PM

December 4, 2004

The 'Walmart' of Trinidad

I thought this might be an interesting story, but I realized that it was all just hype:

Chief executive officer of Pricechopper, Jefferson Sooknarine, has said that the merger between the international company and Cariflex is "to become the Walmart of Trinidad" and it was his intention to give Cariflex new life and new hope....

Sooknarine added that with this initiative there were to be several rules, among them that eight per cent of all profits go to employees while 15 per cent would go to charitable and religious organisations. He said his aim is to transform Pricechopper Cariflex into a more successful company.

This is truly bizarre. This short history of Cariflex indicates that the company has always been in the printing business, not retail sales. And they're not talking about this Pricechopper; they're talking about the one that makes wristbands.

Exactly how do they compare with WM?

Posted by Kevin at 10:24 AM

November 16, 2004

WM Singles Night in Germany

Since I haven't heard of this in the US, I guess that it's just one example of how WM does things differently outside of the US:

DORTMUND, Germany - On a stifling Friday evening, Andreas Semprich, a 35-year-old single father, decided to go looking for love. Or at least a date. He packed up his 2-year-old son and headed to his local Wal-Mart.

Wal-Mart workers greeted him at the sprawling store's entrance with a glass of sparkling wine and freshly shucked oysters. They took his picture and tacked it on a singles bulletin board, along with his age, interests and the qualities he seeks in a prospective partner. Semprich grabbed a shopping cart outfitted with a bright-red bow denoting his unmarried status and hit the aisles.

"I first tried out discotheques, but that did not work," said Semprich. "First of all, when you see some of the women again in daylight, I sometimes almost fainted. No, this here is much better. It is a natural, relaxed atmosphere. And besides, I can also save money. The milk is cheaper than in any other store."

Note that this was originally printed in the Wall Street Journal.

Posted by Kevin at 9:52 AM

November 1, 2004

WM is Bigger than...

Today's "WM is bigger than your country" reference, at Mahalanobis.

(Btw, Mahalanobis was a very famous statistician).

Posted by Kevin at 4:31 PM

September 4, 2004

Wal-Mart in Mexico

Tyler Cowen over at Marginal Revolution posted some excerpts from a financial Times( which is subscription only) story talking about how Nafta has lead to social change in Mexico. Appearantly, most adds feature light skinned Mexicans, but the arrival of American companies has changed this somewhat as they seek out customers beyond the wealthy elite. Wal-Mart is mentioned:

Over the past five years, cheap credit from vehicle companies, department stores and credit card companies has put their products suddenly within the reach of the working classes.
Rogelio Ramirez de la O, an economic consultant, estimates that the Mexican market for cars and appliances is 30m, while the market for cell phones could be as high as 70m [TC: that is out of a total population of about 100 million]. He dates the change to the 1994 North American Free Trade Agreement, which lowered tariffs and prices for US goods and encouraged manufacturers to overproduce. Companies started to issue credit, while Wal-Mart brought rigorous pricing policies, enabling it to sell to more Mexicans. "Foreign companies came to sell to all Mexicans, not just the top 10m, and that is a reality that has influenced Mexican companies."

Posted by Bob at 5:23 PM