Wal-Mart in Mexico - a good thing

interesting article in the NY Times regarding Wal-Mart's presence in Mexico. This is an interesting company - it is so large that it really causes problems for other stores in areas they move into, being a vendor for them (even if you are a large company) is dificult - they have you over a barrel regarding prices and delivery. They seem to be doing a really good thing for the Mexican people though. Read on: bq. Wal-Mart, the biggest corporation in the United States, is already the biggest private employer in Mexico, with 100,164 workers on its payroll here as of last week. Last year, when it gained its No. 1 status in employment, it created about 8,000 new positions � nearly half the permanent new jobs in this struggling country. bq. Wal-Mart's power is changing Mexico in the same way it changed the economic landscape of the United States, and with the same formula: cut prices relentlessly, pump up productivity, pay low wages, ban unions, give suppliers the tightest possible profit margins and sell everything under the sun for less than the guy next door. bq. "This is the game that Wal-Mart has played in the United States," said Diana Farrell, director of McKinsey Global Institute, a policy research group run by the international business consultancy McKinsey & Company. "They've changed the name of the game in Mexico." bq. In the United States and Western Europe, Wal-Mart has been accused of driving down wages, introducing cut-throat business practices and bankrupting local companies. bq. But in Mexico's dreary economy, foreign investment, especially American investment, is about the only bright light, and many Mexicans know it. Cries of economic and cultural imperialism, rampant 10 years ago, when the North American Free Trade Agreement took hold, are more muted now. bq. "Part of globalization is adopting the methods and customs of another country," said Francisco Rivero, an economic analyst in Mexico City. bq. Though it came to this country only 12 years ago, Wal-Mart is doing more business -- closing in on $11 billion a year -- than the entire tourism industry. Wal-Mart sells $6 billion worth of food a year, more than anyone else in Mexico. In fact, it sells more of almost everything than almost anyone. Economists say its price cuts actually drive down the country's rate of inflation. bq. Last year, 585 million people -- nearly six times the population of Mexico -- passed through its check-out lanes. With 633 outlets, Wal-Mart's Mexican operations are by far the biggest outside the United States. bq. Its sales represent about 2 percent of Mexico's gross domestic product -- almost the same as in the United States. Analysts say it now controls something approaching 30 percent of all supermarket food sales in Mexico, and about 6 percent of all retail sales -- also about the same as in the United States. bq. Though Wal-Mart is not the only game in town, it is the biggest, and its bigness is crushing its supermarket competitors. Its methods are creating "a radical change" in the way business is done here, Ms. Farrell said. bq. "Wal-Mart has changed the retail market in Mexico," said Ra�l Arg�elles, a Wal-Mart vice president in Mexico City. "Every store manager has authority to lower prices if he sees the store across the street selling for less. If you have to lower the price, you lower it." bq. For Mexicans trying to compete with Wal-Mart, a new business culture is emerging, based on those hard-nosed, sometimes cut-throat tactics. For Mexicans with money to spend, a new consumer culture is rising, along with the sales of McDonald's hamburgers and Domino's pizzas (the three favorite toppings here are jalape�o peppers, ham and pineapple). bq. The marketplace is making Mexico look more like the United States, like it or not. bq. "From the commercial point of view, it's a total convergence," said Luis de la Calle, who was a chief Nafta negotiator. "If you go to a supermarket in Mexico, the type of products, the service they give you, it's just like you find in the United States or Canada, in terms of variety, quality and price."

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This page contains a single entry by DaveH published on December 7, 2003 9:09 PM.

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