Walmart: good for shoppers, bad for SA

2011-03-26 07:16

Walmart. What’s not to love about the mega shopping chain that chops prices to just a little more than cost, bringing consumer glee and reductions in national ­inflation in the nations in which it operates?

In large measure, Walmart still operates to the mantra of its founder, Sam Walton, which is described by Gary Gereffi and Michelle Christian in the Annual Review of Sociology as: “A ­low-price mantra, treating the customer right, taking care of the staff, being honest in dealings, passing savings along to the customer, keeping things simple, thinking small, controlling costs and constantly improving operations.”

Well, there’s a whole lot more not to love about Walmart.

The company with a gross domestic product higher than South Africa’s (and many other nations) is also associated with labour law infringements.

In 2009, it had to pay out millions in a race discrimination case for discriminatory practices in hiring truckers.

It does not call its employees “workers” but “associates”, indicating how it understands the cogs in the wheel.

Because it is so huge, Walmart has downstream labour market impacts in that it drives wages lower across the value chain because it is famous for cutting prices so close to the bone.

As the assessment is made about whether or not to approve Walmart’s takeover of Massmart, the Competition Tribunal must weigh up the ­economic and social value of low prices versus the potential impact on wages and jobs.

It’s going to be a tough call, but the tribunal should not have caved in to government and ­union pressure to postpone merger hearings that were meant to start this week and have since been ­postponed until May.

The last-minute delay made it look as if our ­institutions (the Competition Tribunal is a ­particularly good one) are subject to political and special-interest pressure.

It creates an unsound ­investor climate and, together with the travails faced by miners who are being skedaddled by the new mine licensing regime, this is not great for South Africa’s reputation.

Neither does City Press buy into the view that any foreign investment is a good investment. ­

Walmart buys across an international value chain, and imports more than it procures locally in most of the countries in which it operates.

This can’t be good for a country like South ­Africa, where we need to kick-start our ­manufacturing abilities.

In assessing foreign investment, we should not shy away from self-interest. Shoprite had a torrid time in India, where organised small traders ­lobbied and marched against it.

Ultimately, this deal must not rest on whether it is good for shoppers, but on whether it is good for the country.

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