Three years after entering Chile, Walmart controls a staggering 34 percent of the entire market.
Walmart entered Chile in 2009 when it acquired D&S, a leading food retailer there. It promptly changed its name to “Walmart Chile” and built off the existing infrastructure.
The stunning statistic about Walmart was part of a speech made by an Indian politician Anurag Thakur opposing foreign direct investments into the country. The country’s “Big Bang” reforms will allow Walmart and other major retailers to sell directly to Indian consumers and will allow some retail stores to open there.
He gave the remarks in a speech opposing U.S. businesses entering the emerging market, the Economic Times reported. Thakur also said that Walmart has left many shopkeepers in Chile penniless and out of business.
This report by UNI Global Union explores the impact Walmart has on suppliers in foreign countries, including Chile:
“In the long term, Walmart pushes prices paid to farmers and manufacturers down rather than
raising them, and producers unable to accept such concessions simply go out of business. The company is so large that it has the power to dictate the terms of suppliers’ contracts, including turnaround time, quality, quantity and price.”
And the control it has in the country:
“In urban Chile, when modern retail arrived in the early 1990s, a large number of small shops went out of business in the span of just a few years. As reported in ICRIER’s May 2008 report, between 1991 and 1995, “15,777 small shops went out of business, mainly in Santiago, a city of 4 million, “representing”21-22% of small general food, meat and fish shops, 25% of deli/meat shops and dairy shops, and 17% in produce shops. Chile’s food retail sector has continued the process of consolidation to the point of negatively impacting free competition. In December 2011, government competition authorities announced an investigation of Chile’s highly concentrated grocery sector, where Walmart is the largest player with 33.4% market share, for possible price collusion of basic products including meats and detergents.”
It isn’t hard to see why emerging markets are wary of U.S. businesses.