Wal-Mart Makes A Move Into South Africa

Originally published on June 2, 2011 6:49 am
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South African officials this week gave Wal-Mart the green light to buy a controlling stake in one of that country's biggest retail chains. It's called Massmart. Wal-Mart wants to reach consumers in South Africa and other parts of the continent. The deal did not come without a fight. Trade unions and industry groups lined up against Wal-Mart.

Liabo Setho is a business reporter for the SABC, the South African Broadcasting Corporation, and she's been following the Wal-Mart story.

Ms. LIABO SETHO (Business reporter, South African Broadcasting Corporation): The unions actually, they wanted the merger to be prohibited altogether. Their argument is that given Wal-Mart's endless anti-union reputation in the U.S., the deal poses a threat to job security of current unionized Massmart workers.

MONTAGNE: And so this approval by South African regulators of a company that is viewed there as an anti-union shop. This approval came with some strong conditions. Tell us briefly what they are.

Ms. SETHO: Yes. Firstly, it was that Wal-Mart and Massmart should not change any workers for a period of two years. And then secondly, Wal-Mart must reemploy 500 workers that were laid off in June last year. And you can imagine a country like South Africa at the moment having problems with creating more employment. Employment is a big issue in South Africa at the moment. So anything that looks like it could jeopardize further job growth or it could diminish job potential poses as a very serious threat to the economy.

MONTAGNE: Are critics comforted by these conditions?

Ms. SETHO: Well, the unions are not entirely satisfied, Renee. They are pleased that these 500 workers will be able to be reinstated and will be given first preference when job opportunities arise within Massmart. But there's also been dissatisfaction with the fact that local procurement issues have not been addressed.

MONTAGNE: And when you speak of procurement, you're speaking of suppliers. Is that correct?

Ms. SETHO: Yes. Yes. With suppliers, what happens is that Massmart is currently sources 90 percent of its products locally. And we know that Wal-Mart obviously it will source its products wherever it can get them cheaper. So now there's a general fear that the local manufacturing firms and suppliers may be out of business if Wal-Mart comes into the country and procures its products internationally or from elsewhere.

MONTAGNE: Who stands to benefit from Wal-Mart taking control of Massmart? Obviously regulators must have felt there would be some benefit to approving this deal.

Ms. SETHO: Well, Renee, certainly consumers will be benefiting from this transaction in a form of lower prices and in the form of greater variety of products on the shelves.

MONTAGNE: Give us a bit of perspective here. Are there other foreign retailers in South Africa, and are they subjected to do this kind of scrutiny?

Ms. SETHO: Well, Renee, when it comes to food retailers, from the best of my knowledge, Wal-Mart would be the only retailer to come into the country. But, of course, other retailers have got foreign shareholders. And no, they have not been subjected to the similar scrutiny, as you put it. So far it's only Wal-Mart and I'd like to believe that this one was scrutinized because of its reputation - of Wal-Mart's anti-union stance in the U.S. and elsewhere in the world.

MONTAGNE: Thank you so much for joining us.

Ms. SETHO: Thank you, Renee.

MONTAGNE: Liabo Setho is a business reporter for the SABC, speaking to us from Johannesburg. Transcript provided by NPR, Copyright NPR.