Wal-Mart's International Business is Leading the Way to a More Global Economy and Market

While many are aware of the spread of Wal-Mart, both locally and globally, it is stretching to some countries in the Far East that may be surprising.

While countries in the Far East have long been providing products and services, a new partnership has developed between a Western and Eastern corporation, both of which are highly successful. Indeed, this partnership is expected to have promising outcomes both for the western and eastern markets.

Wal-Mart has existed in China for a while now and it is opening in India this fall. Wal-Mart will be opening in New Delhi in 2007, partnering with Bharti Enterprises Ltd.

India is Asia's fourth-largest economy and the Chairman of Bharti Enterprise said he expects that several hundred stores will be built across India in the next 4-5 years.

The two firms are expected to co-invest an amount of $1.46 billion.

The Indian retail industry is currently at about $300 billion and is scheduled to grow to $427 billion in 2010 and $637 billion in 2015. Small local stores currently account for 97% of the market.

The venture is supposedly a winning combination. Bharti's execution capability and Wal-Mart's logistics skill are expected to be a powerful combination in India's market.

Bharti is already somewhat of a household name in telecoms, and the company will continue to grow and earn a strong execution reputation.

Shares in Bharti's telecoms unit rose 2.6 percent on Monday, just after the deal was announced.

The partnership with equal stakes will operate in areas where the government allows foreign investments.

The retail shops will be owned by Bharti Enterprises and will be under the Wal-Mart franchise. The purpose is to not only grow Bharti Enterprises, but also to give Indians the guarantee of low-prices that Wal-Mart is so well known for.

Bharti also currently has a partnership with El Rothschild group for FieldFresh which supplies fresh produce to overseas retailers.

Wal-Mart currently has an office in India and anticipates stepping up its sourcing of items like apparel, textiles and shoes from India. These items brought in more than $1.6 billion this year.

While Wal-Mart's US competitors including Target, Kohl's and K-mart offer competition with the US, the Asian and Latin American market give Wal-Mart more room to grow.

Wal-Mart is expected to expand rapidly within China and Latin America.

The Indian market is also growing and foreign retailers are working hard to keep up with India's rapidly growing economy. Multiple-brand retailers, however, are only allowed to operate in India through franchises and licensees.
It is intended that through the regulatory framework that is setup in India, no foreign company will be able to plow over an Indian retailer.

Retail of India currently makes up 3 percent of the market, which is quite low compared to China's 20% and Thailand's 40%. India's retail percentage is expected to raise at least 15-18% in the next 5-6 years.

Other news in Wal-Mart's International business involves banking in Mexico.

That's right, Wal-Mart de Mexico is expected to start a bank next year. This will be Wal-Mart's first banking operation.
Wal-Mart currently offers loans in Mexico City. The plan to plunge into the banking business will improve competitiveness in Mexico's financial industry.

Mexico's current financial industry is dominated by a few foreign giants including; BBVA, Citigroup, Santander, and HSBC.

The foreign-owned banks have brought life back to Mexico's financial system; they are not as competitive as they could be according to numerous critics.

These foreign-owned banks are accused of charging ridiculously high fees and interest rates. The government is hoping that banks run by Wal-Mart de Mexico will increase competition and that the financial industry will be more focused on low-income consumers, a large majority of Mexican citizens that the bigger foreign banks have ignored.

Retail banks in Mexico could have several problems warn critics.

Retailers may dip into their banks for cash if the need arises.

In order to allow more competition, there also needs to be supervision which has a handle on how things are growing and how all funds are being handled.