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Pattaya Daily News

02 June 2011 :: 10:06:20 am 54372

Walmart to expand into Africa

Despite heavy opposition from trade unions, Walmart, the world’s largest retailer, won its battle to develop and expand into Africa.
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The deal paves the way for Walmart, who own Britain’s Asda supermarkets, to gain a foothold in a fourth continent, having already bulldozed through America, Asia and Europe.

South Africa’s competition tribunal approved the retail giant’s $2.4bn bid for Massmart, which currently operates 288 stores throughout South Africa and a dozen other African countries.

People supporting the multi-billion dollar deal saw it as a clear message in Africa’s economic growth, that South Africa is ready to play with the biggest of the big. But the country’s powerful trade unions are not as excited about the takeover as others, expressing fears that it is likely to drive down wages and cost jobs.

Warnings of demonstrations, strike action and boycotts were bubbling in the air as the multinational corporation prepares for the new move.

It has been suggested that the deal is being seen as a test case for foreign investment in South Africa, where the continent’s deepest capital markets lie, but where unions also hold enormous political influence.

Walmart has laid its foundations in Brazil, China and Mexico but faced particularly fierce resistance to its bid for a 51% stake in Massmart, a discount retailer who, like Walmart, sell everything from cheese and milk to I-pods and televisions.

The deal had been approved under the stipulation that Walmart must not cut jobs for two years and must make efforts to develop local suppliers. The chain must also prioritize re-employing 500 workers that were fired last year over taking on fresh staff.

“The merging parties contend that the merger will indeed be good for competition by bringing lower prices and additional choice to South Africa’s consumers,” the tribunal said. “We accept that this is a likely outcome of the merger based on Walmart’s history in bringing about lower prices.”

“However, the extent of this consumer benefit is by no means clear – Walmart itself has not been able to put a number to this claim, only that it is likely.”

Three government departments formed a resistance to the deal, requesting the tribunal to impose targets for local procurement and a freeze on job cuts. But when faced with such circumstances, Walmart threatened to turn its back on the negotiations.

The main concerns are over Walmart’s global supply network, which could potentially lead to an influx of cheap imports, inciting job losses and draining local suppliers.

Patrick Cavern, spokesman for the Congress of South Africa’s Trade Unions, said : “Overall we think it’s a victory for Walmart and we shall be continuing our campaign against the takeover of the Massmart stores. We believe all the reasons for that campaign are still valid.”

Written by : Kyle Pala

Photo : Internet   Category : World News

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