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Wal-Mart Controls 30% of Supermarket Sales in Mexico

WAL-MART NOW MEXICO'S
LARGEST PRIVATE EMPLOYER,
RESHAPING ECONOMIC LANDSCAPE

TIM WEINER, NEW YORK TIMES: The company that ate America is now swallowing Mexico.

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.

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.

"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 & Co. "They've changed the name
of the game in Mexico."

In the United States and Western Europe, Wal-Mart has been accused of
driving down wages, introducing cutthroat business practices and bankrupting
local companies.

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 ten years ago when the North
American Free Trade Agreement took hold, are more muted now.

"Part of globalization is adopting the methods and customs of another
country," said Francisco Rivero, an economic analyst in Mexico City.

Under the influence of NAFTA, Mexico has become more like the United States,
moving away from making things to selling them. Manufacturing is migrating
to places such as China, where wages are even lower than here. And nobody
sells like Wal-Mart. Though it came to this country only 12 years ago, it 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.

Last year, 585 million people --- nearly six times the population of Mexico
--- passed through its checkout lanes. With 633 outlets, Wal-Mart's Mexican operations are by far the biggest outside the United States.

Its sales represent about two percent of Mexico's gross domestic product ---
almost the same as in the United States. Analysts say it now controls something
approaching 30% of all supermarket food sales in Mexico, and about six
percent of all retail sales --- also about the same as in the United States.

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, Farrell said.

"Wal-Mart has changed the retail market in Mexico," said Raul Arguelles, 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."

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