Saturday, June 4, 2011

An Unwelcomed Giant

At the end of May it was announced that Massmart, a local South African retailer, has approved a $2.4 billion (R16.5 billion) merger with Wal-Mart. For Wal-Mart this is obviously a great step into their further expansion and domination. Now that they have a foothold in South Africa, it can become a bounding point for expanding into the rest of the African continent. For some in South Africa, the arrival of Wal-Mart is thought to bring lower prices which will force healthy competition among other retailers, and even attract other foreign investors to expand their businesses into South Africa. All good news right?

Just to warn you, I am approaching this topic with a slight bias against Wal-Mart and everything that it stands for. My discussion about the topic of Wal-Mart taking over South Africa will therefore inevitably be swayed by said biased opinions, and I apologize in advance for my seemingly one-sided presentation of ideas.

In speaking of the upcoming merger, Wal-Mart CEO Doug McMillon promised to provide “previously underserved customers and communities with better prices and increased access to the products they want and need.” But I have one question for McMillon—how do you know that the customers and communities of South Africa are underserved? How can you know that people do not have what they want and need from the other side of the ocean? In my experience, the current shopping available in South Africa is plentiful- you can get what you need, even if you have to travel a fair distance to get there. From Masealama I may have to travel about an hour in a taxi to get to the shops in Turfloop, but once I am there I know that I will find local shops that provide the people with exactly what they need, at great prices. So the Shoprite that I go to may not have cinnamon or whole-wheat noodles, but the store stocks what is purchased, thus saving money and space. If Wal-Mart were to take over, I imagine the store would have to be tripled in size so that there could be more aisles providing more items of things that we do not really need in the first place. South Africa is NOT underserved.

The conditions with which the merger occurred are also of interest. Massmart only agreed to the merger if Wal-Mart would abide by certain regulations, like recognizing the SA Commercial Catering and Allied Workers Union (Saccawu). Wal-Mart did agree, but only for three years after the merger. As soon as I arrived in South Africa I soon realized how important the unions are to workers in all sectors of business all over the country. I have experienced strikes from people involved with education, transportation, garbage disposal, mining, service delivery, political activity, and much more. If there is something that needs to be changed or reconsidered, people gather together and strike in protest so that their concerns are recognized and hopefully addressed. It is how things are done here, and I fear that if Wal-Mart does decided to refuse Saccawu then things will not end well. Wal-Mart would be denying their workers of what they see as their political rights- the right to free speech and protest- and in a way offending and denying the workings of the pre-established checks and balances system of South Africa.

And of course, I am also fearful of how the promised low prices of Wal-Mart will affect the current diversity and uniqueness of the local shops. Many small businesses will inevitably be unable to compete, and will thus be forced out of business. Losing the small tuck shops and local spazas will take a lot of the flavor and culture out of the streets of South Africa. It would not be the same to walk down the streets of Turfloop without passing through local shops blaring house music out onto the sidewalks.

I also hope that Wal-Mart revaluates the size of its parking lots for South Africa, if not I am fearful that we will wind up with acres of paved over land serving no purpose but to add to the issues of global warming and run-off. More people in South Africa walk, taxi, or carpool, so let’s not put an American sized parking lot out front.

And with that I will stop my rantings. The globalization of American companies is a multifaceted issue which has positives and negatives depending how you look at it. Yes, this is a great move for Wal-Mart which promises a lot of future success down the road, but at what expense? I for one am not in favor of this particular instance of globalization.

~Heather Anne Nelson

1 comment:

  1. You go girl!!!!! Wallmart tried to enter Germany. The potential customers simply didn't respond. They were not willing to shop there. So what few stores opened closed.