Foreign Direct Investment In Retail Research Articles

FDI in India - Its Impact on Entrepreneurial Ventures in India

This Paper intends to examine the impact of FDI in India on Entrepreneurial Ventures, both existing and upcoming. As a part of the Research Methodology, Data was gathered by a survey conducted on two existing entrepreneurial firms and one upcoming one, using a Questionnaire method. The Questionnaire was composed of both factual and perceptional questions. Utilizing the collected data this study shows that the sampled Entrepreneurial firms are high on Innovation and thereby a hypothesis was made for the same.The firms selected were based on their performance, innovation, invention, risk taking factors. The conclusion establishes a relationship between the government policies and the performance of Entrepreneurial units. If the government policies are framed to promote entrepreneurial ventures then the impact would be positive, however if the government policies are more favorable towards FDI then this would lead to tarnishing the upcoming entrepreneurial ventures in the coming years, as the business giants would absorb these new and tiny ventures and constrain their development process. A recent article published in the Times of India also states that the government must put a check and see the constitutional validity of the centre’s decision to allow foreign direct investment in multi brand retail. A Supreme Court bench also questioned the government whether they had received any proposals since the parliament approved the policy decision about six to seven weeks ago. This was justified by the government by stating that the foreign direct investment in retail would take some time as it is a part of series of reforms that would transform the country’s investment scenario to make it lucrative enough for foreign investors and importantly for consumers and small traders and entrepreneurs. Finally the Supreme Court also asked the government to spell out safeguards put in place to protect small traders from a possible onslaught of multinationals in the future.

FDI in retail: plight of women vegetable vendors

Foreign direct investment (FDI) in retail sector is being vehemently justified, claiming its positive impact on the farm sector. This argument is quite a distant dream and could be challenged on many grounds. Hitherto, the hypotheses were not tested with micro-level data. From the micro-study, it emerges that direct implications are confronted by the unorganised retail sector more so by the economically unprotected vendors. A large number of them are females as also heads of the households. They are therefore quite vulnerable not only on economic front but also on other facets of life. Today, their livelihood is defined on the pavements and by the pavements, largely by their consumers, suppliers and other exploiters. There are hardly any attempts to analyse their plight using micro-level data. This paper brings forth the challenges confronted by this ‘policy-bypassed masses’ and contextualises it in the current debate. If continually by-passed, it is likely to create a severe economic and social scar on women vendors.

Do Retail Foreign Direct Investment Restrictions Affect Retail Channel Structure?

The purpose of this study is to contribute to the existing retail channel structure research by investigating the impact of retail foreign direct investment (FDI) restrictions on retail channel structure as well as the moderating impact of a country's level of economic development on this relationship. Using a panel data set of 79 countries over the period 1999–2012, we show that retail FDI restrictions can influence retail channel structure development and that the relationship between retail FDI restrictions and retail channel structure is moderated by a country's level of economic development.

Aachi – spicing up a growth trajectory

Subject area Marketing and entrepreneurship. Study level/applicability The case is applicable to MBA core marketing, sales and distribution, strategic marketing, fast-moving consumer goods (FMCG) marketing and entrepreneurship. Case overview Isaac Padmasingh, a first-generation entrepreneur who was awarded TiECon's “Extreme Entrepreneur of the Year 2010”, has built a thriving enterprise. From his first job as a salesman in Godrej to being the founder of “Aachi” group of companies with a turnover of INR 700 crores (USD132 million) annual revenue, he has had quite an eventful journey. His early insights in Godrej in sales and distribution, coupled with his entrepreneurial passion, have enabled him to grow his company this far in a short span of 14 years. His business is partly managed by his wife and his two sons who are the directors of this private enterprise. Now he is making bold moves to venture outside Tamil Nadu and become a national brand, which means a major scaling up and moving into the next orbit. Vital questions in scaling are: Is Aachi pursuing the right growth strategy in their effort to scale up? How can Aachi look at the imminent foreign direct investment in retail as an opportunity for growth? Looking back over the years, what has Aachi learnt and how to carry forward the best practices and learn from the mistakes made? Expected learning outcomes Entrepreneurship: to introduce the entrepreneurial vision in creating a new enterprise, and to understand the characteristics of an entrepreneur. FMCG marketing: to discuss the importance of going-to-the-market strategy, to discuss the importance of distribution reach in rural marketing, to discuss the nuances of branding in Aachi's growth story and to familiarize students in successfully marketing FMCG products. Growth strategies: identifying opportunities for the future, and to explore the growth strategies suitable for Aachi. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Re‐Regulation in the Post‐WTO Period? A Case Study of Vietnam's Food Retailing Sector

AbstractAcademic interest on domestic regulatory (and re‐regulatory) impacts of retail foreign direct investment remains surprisingly under‐researched, despite high‐profile campaigns, particularly in Southeast Asia, to rein in the expansion of retail transnational corporations. This paper focuses on the trends of re‐regulation of foreign retailers, particularly in the food sector, in Vietnam before and after the accession to the World Trade Organization (WTO) in 2007. The findings reveal a complex layering of regulation, some of it a holdover from the pre‐2007 period and some of it occurring since WTO accession, in the form of the controversial Economic Needs Test.

Multinational Corporations in Indian Food Retail: Why and How Size Matters

Over and above the political debates, policies and latest developments that hit the headlines regarding the issue of foreign direct investment (FDI) in food retail in India, the question will benefit from conceptual work that demonstrates how retail corporations in general and retail multinational corporations (MNCs) in particular are different in their structure and logic of operation from the existing retail arrangements in countries like India. This article attempts to rephrase the problematic vis-à-vis FDI in retail so as to bring an analytical lens to the heart of the problem. It develops four themes—( i) it argues that FDI induced MNC-led retail needs to be re-imagined as a single global movement spearheaded by a handful of powerful corporations; ( ii) it then investigates the retail corporate structure and logic to point to the built-in tendencies towards monopsony and oligopoly/monopoly in them; ( iii) it goes on to draw the links between this corporate structure, its logic and the resultant impacts of ‘supermarketization’ that have been noted in literature globally; and ( iv) finally, the article articulates how the nature and scope of impacts differ between corporate retail led by national corporations and FDI induced multinational retail. Without such an analytical exercise, terminologies such as formal–informal, organized– unorganized, modern–traditional, free market–state regulated and even foreign–national can only prove misleading and limited. This article covers an extensive range of impacts of supermarketization to demonstrate that they are widely dispersed over space and time. While the focus of most debates has been on the negative consequences for the traditional retail sector, there are equally significant implications for suppliers (farmers and manufacturers), consumers, markets and society in general.

Retail Sector in India: Present Scenario, Emerging Opportunities and Challenges

The Government’s initiative to allow 51 per cent foreign direct investment (FDI) in multi-brand retail has been a subject for debate for quite some time now. Indian retail sector has therefore attracted the attention of people from various fields including academia, industry, research organisations. The present study is undertaken to gain an insight about the present structure of Indian Retail Sector, the major sub-sectors in organized and traditional retail and changes in the relative share of various sub-sectors over last few years and penetration of organized retail in various segments. The analysis also covers the opportunities and emerging challenges before Indian retail sector in view of recent policy changes by Government of India. With India's large ‘young’ population and high domestic consumption, the macro trends for the sector look favorable. The Indian retail sector is highly fragmented with more tha n n ine ty per cent of its business being run by the unorganized retailers like the traditional family run stores and corner stores. During 2005-07 and 2007-10, the share of organized retail increased by 13.9 percent and 21.9 percent respectively. However thereafter organized retail is penetrating the market at a more rapid pace. During the period 2010-12 share of organized retail rose by 60 percent and is expected to increase by 2.6 times during 2012-15. Clothing/Apparel segment is the biggest contributor in organised retailing in India in both the years of study. In 2012 it alone accounted for 33 percent of organized retail followed by Food & Grocery and Mobile and telecom with each having 11 percent share in organized retail. Organized retail had highest penetration in Apparel both in 2007 and 2012. Food and Grocery segment is dominated by traditional retail but in 2012, organized retail penetration in this sector had more than doubled. In view of the recent policy changes, both the existing traditional retailers and modern organised domestic and foreign retailers would have opportunities and face challenges. On one hand, the policy exposes the domestic retailers to competition from foreign retailers; while on the other hand, it seeks to safeguard them through a slew of protective measures. The future prospects of Indian retail market are likely to have some macro-economic impact too. Prospective reduction in supply chain impediments may help in reducing supply side inflationary pressures. Future growth of India’s retail sector is also expected to increase employment. The nuances of FDI in retail are still to be worked out.

An Economic Analysis of Foreign Direct Investment in Retail Sector in India

India has been placed at first position in the category of countries with the best opportunity for investment in retail sector. The increasing disposable incomes among the Indian middle class and increasing young population have been cited as the main reasons for such attractive optimism. Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP. The Indian retail market is estimated to be US $450 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people. After months of discussion with various hurdles on 14 September, 2012 the cabinet approved the foreign direct investment in retail in India allowed 100% FDI in Single Brand and 51% FDI in Multiple brand with many preconditions. The minimum FDI limit has been set at $100 million. Half of any investment has to make in infrastructure like cold-storage chains and warehouses. With at least 30% of the goods to be sold will have to source from local producers.On December 5, 2012 in Lok Shaba after long discussion also given approval to FDI in retail as per the cabinet approval with some amendments likes FDI in retail in cities with a population over one million as well as the states of India have the prerogative to accept it and implement it or they can decide to implement it if they so choose. Actual implementation of policy will be within the parameter of state law and regulations.This Research Paper makes a modest attempt of developing an insight as to what are the trends in the Indian Retail Industry and to the benefits and drawbacks of FDI in this sector. It has also focused on whether this policy will be beneficial for the Indian Economy as a whole or not.

The emerging food retail structure of Vietnam

PurposeThe purpose of this paper is to trace the modernisation of the retail structure of Vietnam from a closed market to one that is increasingly open to retail transnational corporation (TNC) entry and associated Western retail formats.Design/methodology/approachThe authors undertake this study of retail change through the analysis of a wide range of governmental and industry secondary data – much of which has not entered western academic debate given the challenges of access and translation. In doing so, this period of adaptation is related to well‐known studies concerning the diffusion of western forms of retailing discussed across the social sciences.FindingsAs a country encountering the third wave of supermarket proliferation within emerging markets, Vietnam's experience is found to broadly fit the models of retail foreign direct investment (FDI) entry and retail “modernisation” suggested by Natawidjaja et al. and Dries et al. The retail change process was affected by a slow, progressive creep of market liberalisation where, as late as 2009, a foreign partner could hold only up to 49 per cent of capital in a joint venture. While analysis of the evidence suggests some retailers flouted these laws or employed creative approaches to mitigating their effects, such regulations clearly underpinned a less intense initial influx of retail FDI than had been experienced elsewhere in Asia and maintained a high domestic ownership level in the retail market. Retail modernisation has intensified in recent years, with greater international entry, expansion and retail format proliferation diffusing from cities to more rural locations, though the top five grocery operators still account for less than 4 per cent of the grocery market.Originality/valueStudies within retail management of retail internationalisation have tended to focus on fully liberalised countries that have attracted high rates of retail capital. In contrast, this paper focuses on understanding the emergence of one of the countries somewhat later to these trends.

FDI in Indian Retail Sector: Groundwork for Effective Implementation

After being subject to incessant political discussion, debate and protest since it was introduced, the policy of Foreign Direct Investment (FDI) in Indian retail is now no more a myth or a distant dream. The ruling party recently passed the trial by fire in both Houses of Parliament, and a policy that is largely hailed as reformative in nature received the assent of the ruling class. Industry body Federation of Indian Chambers of Commerce and Industry (FICCI) recently said that the size of India's retail industry is expected to more than double to $1.3 trillion by 2020, led by an estimated 25 percent average annual growth in organised retail if overseas investment is permitted in the sector. Currently, the organised retail sector holds a paltry 7-8% share, while a large chunk of all retailing activities are traditional/unorganized. This stunted growth of organised retail will witness a makeover following the opening up of the retail sector to FDI. Thus, it is no question of primacy that it will usher in a new era of economic reforms that will provide the adequate boost to countermand the slump and refurbish international belief in the growth story of India Inc., but, only if it is implemented soundly. In this stride, a self-assessment test of our economic, political and regulatory framework to meet the requirements for effective enactment without drawbacks is sure to reveal some grey areas. The findings of this study will identify such key issues and lacunae that need to be tackled with before the influx of foreign direct investment. These include the issue of major global retailers exercising monopolistic practices by way of large-scale procurement at rates that will be subversive to the interests of suppliers and farmers, predatory pricing and cartelization to destroy businesses of the unorganized retailers, the need for stringent local sourcing norms which cannot be flouted or over-ruled on a case to case basis, the role of politics in State specific enactment of the FDI in retail policy, etc. One of the major issues raised by the anti-FDI lobbyists was that the Indian retail sector, particularly the organized retail sector being under-developed and in a nascent stage, this domestic retail sector should be allowed to grow and consolidate first, before opening up the sector to foreign investors. Since this demand cannot be met with anymore, the need for strong governmental action in extending parallel developmental support to the MSME and unorganized retail sector will also be discussed at length. Finally, solutions and recommendations for effective implementation will be put forth for consideration. Only the governmental action in ensuring that proper frameworks are in place before the advent of FDI in retail will define whether it becomes a game changer or a failure. More than ever, now is the need for lasting reforms to take root in the Indian economy, and ensuring the efficacy of the FDI in retail regime will go a long way in achieving this goal. For this to happen, it necessarily needs to be free from controversies and should cater to the interests of the populace and not to that of the global retail giants.

FDI in multi-brand retail: an empirical study of consumers in NCR region (India)

During recent years major thrust to India’s economic growth has come from services sector; however, this growth needs to be more inclusive. For imparting a more inclusive character to services sector, it is imperative to touch upon domains like retail where participation of people percolates down to the lowest level. This sector requires huge investments to achieve quantum leap in productivity and efficiency. Foreign direct investment (FDI) is often quoted as a vital instrument for catalysing these positive changes. Issue of FDI in retail has been marred with controversies, most of which have political connotations. Though foreign players are already operating in the Indian market as cash and carry and single brand retail formats, present debate centres on permitting FDI in multi-brand retailing. Different stakeholders have different opinions based on their perception of the likely impact of FDI on their interests. Against this backdrop, present study attempts to take stock of consumer opinion on FDI in m...

FDI and Indian Retail Sector: An Analysis

In the post-liberalisation period, changes in the consumer purchase behaviour are seen with growing liberalisation, rise in per capita income, GDP and explosion of brands. This rise in large base of consumers has been an attraction for big global retailers and major domestic corporate sector to invest in modern retail sector in India. This unprecedented rise in multiple brands has given Indian consumers a wider choice of products and ample opportunities to take advantage of in the present scenario. The retail industry is expected to grow at a rate of 14% by 2013. The first step towards allowing Foreign Direct Investment in Retail was taken in the year 2006. Subsequently the government of India has allowed 100% FDI in single brand retail to give consumers greater access to foreign brands, with the ongoing debate whether it should be allowed in multi-brand retail or not. With emergence of new ways like E-retailing, Indian retail sector is growing at a faster rate along with the employment potential. The retail landscape is showing a marked change, along with changes in the strategies of retailers towards the suppliers so as to get the best advantage. With the rapidly changing retail scene, India is soon going to be one of the fastest growing regions having great potential. The objective of the present paper is to analyse the impact of the present retail FDI policy on Indian consumers and economy using SWOT analysis. The analysis reveals that it will have a positive impact on the growth of Indian economy as a whole.

Retail Sector in India – Is It Necessary for Inviting FDI?

Retailing is the last link that connects the individual consumer with the manufacturing and the distribution chain. The Indian retail sector is highly fragmented, with 97% of its business being run by the unorganized retailers. The organized retail, however, is at a very nascent stage. Foreign direct investment (FDI) in multi-brand retailing must be dealt cautiously, as it has direct impact on a large chunk of population. Many of the foreign brands would come to India if FDI in multi-brand retail is permitted, which can be a blessing in disguise for the economy. In India, the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter into newer markets, which in turn will help the Indian retail industry to grow faster. Given this backdrop, the recent clamor about opening up the retail sector to FDI becomes a very sensitive issue, with arguments to support both sides of the debate. Supporters of FDI in retail trade talk of how ultimately the consumer is benefited by both price reductions and improved selection, brought about by the technology and know-how of foreign players in the market. This in turn can lead to greater output and domestic consumption. But, the most important factor against FDI-driven ‘modern retailing’ is that it is labour displacing to the extent that it can only expand by destroying the traditional retail sector. Till such time that we are in a position to create jobs on a large scale in manufacturing, it would make eminent sense that any policy that results in the elimination of jobs in the unorganized retail sector should be kept on hold (Sahoo, 2005). Though most of the high-decibel arguments in favour of FDI in the retail sector are not without some merit, it is not fully applicable to the retailing sector in India, or at least not yet. This paper provides information about the growth of retailing industry in India and the need for FDI. The paper includes growth of retail sector in India, retail format in India, recent trends and opportunities for development through FDI.

FDI in Retail Sector in South Asia: A Case of India

Foreign Direct Investment (FDI) has become the necessity of every nation as it does accelerate growth in an economy. FDI is double edge weapon as it cuts both ways. It supplements the resources of the host country and also may replace resources in the host country. South Asia is a region wherein FDI has been restricted in the retail sector where as South Asian region is the region of shopkeepers. Hardly 5 per cent of the retailing is in the organized sector and the remaining 95 per cent is unorganized sector. Hence, the biggest issue in South Asia in general and India in particular is whether to allow FDI in the retail sector. Allowing FDI in retail sector would create a plethora of new and modern retailing to the consumers but may generate unemployment to the enormous people in the region. With this back drop, the major objectives of this paper are to highlight the scenario of FDI in retail in South Asia, focusing specifically on India. The paper, as such, is divided into six sections. Section I deals with the introduction. Section II enlists the objectives of the paper to be looked at. Section III deals with the methodology adopted in the study. Section IV highlights FDI scenario in retail sector in South Asian nations. Section V analyses a detailed study of FDI in retail sector in India. Lastly, Section VI includes conclusions that are drawn from the study.

Invest In India–The Foreign Direct Investment Scenario

Invest in India is an initiative to market India as an investment destination all over the globe, to provide a networking platform to the Indian businesses at a global level and to provide information to the international investors about investment opportunities in India. It is the policy of the Government of India to attract and promote productive Foreign Direct Investment (FDI) from non-residents in activities which significantly contribute to industrialization and socio-economic development. FDI supplements the domestic capital and technology. This paper firstly speaks about the FDI culture in India, secondly, reviews economic reforms in India and global response to India’s reforms, the next level discusses the policy issues that would address India’s relative lack of success in attracting FDI and the ‘Expanding Opportunities for Global Retailers’ with reference to the retail sector. The last part reveals the key recommendations towards attracting Diaspora FDI. Based on the objective analysis, the key recommendations towards attracting FDI are revealed like allow 100 % FDI in retail and Small & Medium Enterprises (SME), develop a strategic vision for FDI with focus on latest technology, reduce the transaction costs & improve the infrastructure, international and domestic entrepreneurship, decentralize the administration process, reduce overly bureaucratic FDI facilities, private public partnership with private sector taking the lead, Indian professionals placed in key decision making positions, creative joint ventures and partnership to tap entrepreneurship and fix the policies to convert remittances into investment & create venture capital.

The “Continuously Morphing” Retail TNC During Market Entry: Interpreting Tesco’s Expansion into the United States

abstractOne important element of recent conceptualizations of the distinctive nature and challenges of retail transnational corporations (TNCs) is a focus on the mutual transformation of both the markets entered by the retail TNCs and, reciprocally, of the organizational structures of the firms themselves. There are important similarities between this view of ongoing transnational-operation-induced organizational transformation of the retail TNCs and processes that strategic and organizational management scholars describe as “continuous morphing.” In this article, we provide a theoretically informed study of one of the most dynamic of the retail TNCs (Tesco plc) “morphing” its organizational structures and competencies during a high risk, but potentially transformational, market entry into the western United States. The article positions the study within the rapidly emerging literature on transnational retail and the global economy, interprets the innovative dimensions of Tesco’s U.S. market entry—particularly its attempts to achieve “territorial” and “network embeddedness”—through the conceptual lens recently provided by economic geographers, and assesses ongoing transformational impacts of the entry on the firm. It adds value to the literature on retail foreign direct investment by documenting the ways in which this leading retail TNC has attempted both to reconfigure its existing capabilities and to develop the new capabilities required to support its U.S. market entry via a combination of processes that we describe as transference, splicing, and enhanced imitation.

The Transformation of Food Retail in the Philippines

From a small base by the end of the 1990s, modern retail (the chains selling at least some food) in the Philippines grew very rapidly in the 2000s, at thrice the rate of the country's GDP growth. Reaching 13 billion USD of overall sales by 2010, 5.25 billion USD of this amount came from food sales. While much of the policy debate about market development focuses on export markets, we will show that supermarkets in the Philippines already sell twice the value (volume priced at export prices) of food that is exported – and modern retail is growing faster. Modern retail has reached 45 percent of urban food retail – already beyond the share of the middle class in the population, and about 35 percent of the national food market – from a tiny fraction of that figure two decades ago. Modern food retail is itself rapidly transforming – with a rise of fresh produce sales, industry concentration, format diversification off-mall into formats that permit greater market penetration, and emerging procurement system modernization. While traditional food retail (and even most aspects of modern food retail) in the Philippines track international experience, the lack of major foreign presence even after retail foreign direct investment (FDI) liberalization in 2000 is a puzzle about which we present hypotheses. Given the already large and increasing importance of food retail modernization in the Philippines, this theme should enter the agrifood research mainstream and be the subject of systematic field surv

Institutional and Economic Determinants of Transnational Retailer Expansion and Performance: A Comparative Analysis of Wal-Mart and Carrefour

In the context of a wave of retail foreign direct investment and increasing recognition across many disciplines of the profound developmental implications of transnational retail within the global economy, this paper examines the institutional and economic factors determining the performance of transnational retailers via a comparative analysis of the two global leaders in the industry, Wal-Mart and Carrefour. A conceptual framework is offered for explaining the heterogeneity of retailer performance in international markets, and three types of explanation are considered: the timing and mode of market entry and subsequent expansion, factors that allow the exercise of upstream market power, and sensitivity to issues of labour organization and standards. The two retailers are found to be differentially impacted by those factors, indicating the need to consider a process of institutional hybridization as central to the explanation of transnational retail performance.

Host economy impacts of transnational retail: the research agenda

The last decade has witnessed an acceleration of retail foreign direct investment into a range of emerging markets across East Asia, Central and Eastern Europe and Latin America, led by a small cohort of food and general merchandise retailers from Western Europe, and to a lesser extent, North America. While these investment flows have had profound developmental impacts in host economies, research in this area is still in its infancy. This article therefore maps out a detailed research agenda with respect to the host economy impacts of transnational retailing. After setting the scene empirically and conceptually, the article considers different dimensions of these impacts on retail competitiveness, supply chain dynamics, consumption practices and consumer/civil society, institutional and regulatory frameworks and, reciprocally, on the retail transnational corporations themselves. It concludes by calling for a concerted interdisciplinary research effort into this important and understudied aspect of economic globalization.

The Supermarket Revolution in Developing Countries: Policies to Address Emerging Tensions Among Supermarkets, Suppliers and Traditional Retailers

Supermarkets (short for all modern retail) are spreading quickly in developing countries. The ‘take-off’ occurred as recently as the early to mid-1990s, driven by an avalanche of foreign direct investment (FDI) sparked by retail FDI liberalisation. A decade on, the power and dominance of supermarkets is already felt in the food markets of many developing countries, and tensions between supermarkets and traditional retailers, and supermarkets and their suppliers, are emerging as key policy and political debates. This paper analyses those tensions. It then reviews the US and Western European history and current experience in designing policies (regulations and support programmes) to address those tensions. It ends with an analysis of emerging policy approaches to the supermarket sector and the tensions its growth is creating in developing countries, and recommendations. Les supermarches (terme adopte pour tous les modes de distribution modernes) s'etendent rapidement dans les pays en developpement. Le « dec...