12-15-2005, 12:03 AM
Firstly, the market of some $300MM or so is not unexplored as mentioned in the email that you have attached. That market is currently occupied by the indian retailers and is only an oppurtunity for Wal-mart and others to enter and is currently being served without any problems by indian shops. So letting foreign companies like wal-mart into non-tech areas is only going to be at the expense of indians. In US itself, there are many counties where Wal-mart is blocked out by the local retailers and residents as it leads to loss of jobs.
Now, to the question of how Wal-mart does its business. Wal-mart is a supply chain optimizer. Say a product cost Rs 10 to manufacture and and sells for Rs 40. The supply chain cost is Rs 30. wal-mart optimises the supply chain and reduces their costs to say Rs 15 and would sell the same product for Rs 30. They are able to cut down costs by automating and by high-tech inventory management (UPC bar codes and RFIs and warehouse managing). As wal-mart gains more market share, it would start squeezing the manufacturer to reduce their cost price for Rs 10 to say Rs 8 and pass on Re 1 to customer and pocket the rest.
For the indian customer, it is all upside, but what about the indian retailers and indian manufacturers? Both would go out of business. The indian retailers because they would not be able to match wal-mart prices and indian manufacurers because they would not sell anymore. Wal-mart buys 90% of their goods from china where the labor cost are so low as compared to india that the manufacturing cost is 1/2 of india. So where do u think Wal-mart would buy from? (It is another matter why chinese cost are so low. Did u guys read the book "Animal farm" by George Orwell? How the pigs management can get better productivity from animals than the human management becos the animals think they are ruled by one of the animals, not humans. That is the case in china)
As for the job generation, in the US, whereever walmart has setup stores, for every 10 jobs lost in the neighorhood, only 1 job has been created. Not to mention the fact that walmart underpays (actually they do not allow their employees to work full time of 40 hrs as then they would have to pay health insurance. So most of the walmart employees end up without insurance with the US govt footing the bill). So the job generation is also a hoax.
On the whole, this is a horrible idea. I hate to say it, but the commies are right on this one.
Now, to the question of how Wal-mart does its business. Wal-mart is a supply chain optimizer. Say a product cost Rs 10 to manufacture and and sells for Rs 40. The supply chain cost is Rs 30. wal-mart optimises the supply chain and reduces their costs to say Rs 15 and would sell the same product for Rs 30. They are able to cut down costs by automating and by high-tech inventory management (UPC bar codes and RFIs and warehouse managing). As wal-mart gains more market share, it would start squeezing the manufacturer to reduce their cost price for Rs 10 to say Rs 8 and pass on Re 1 to customer and pocket the rest.
For the indian customer, it is all upside, but what about the indian retailers and indian manufacturers? Both would go out of business. The indian retailers because they would not be able to match wal-mart prices and indian manufacurers because they would not sell anymore. Wal-mart buys 90% of their goods from china where the labor cost are so low as compared to india that the manufacturing cost is 1/2 of india. So where do u think Wal-mart would buy from? (It is another matter why chinese cost are so low. Did u guys read the book "Animal farm" by George Orwell? How the pigs management can get better productivity from animals than the human management becos the animals think they are ruled by one of the animals, not humans. That is the case in china)
As for the job generation, in the US, whereever walmart has setup stores, for every 10 jobs lost in the neighorhood, only 1 job has been created. Not to mention the fact that walmart underpays (actually they do not allow their employees to work full time of 40 hrs as then they would have to pay health insurance. So most of the walmart employees end up without insurance with the US govt footing the bill). So the job generation is also a hoax.
On the whole, this is a horrible idea. I hate to say it, but the commies are right on this one.