MEXICO CITY, Dec. 5 - 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 & Company. "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 cut-throat
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 10 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.
Though it came to this country only 12 years ago, Wal-Mart
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 check-out lanes.
With 633 outlets, Wal-Mart's Mexican operations are by far
the biggest outside the United States.
Its sales represent about 2 percent of Mexico's gross
domestic product - almost the same as in the United States.
Analysts say it now controls something approaching 30
percent of all supermarket food sales in Mexico, and about
6 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, Ms. Farrell said.
"Wal-Mart has changed the retail market in Mexico," said
Raúl Argüelles, 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. If you
have to lower the price, you lower it."
For Mexicans trying to compete with Wal-Mart, a new
business culture is emerging, based on those hard-nosed,
sometimes cut-throat tactics. For Mexicans with money to
spend, a new consumer culture is rising, along with the
sales of McDonald's hamburgers and Domino's pizzas (the
three favorite toppings here are jalapeño peppers, ham and
pineapple).
The marketplace is making Mexico look more like the United
States, like it or not.
"From the commercial point of view, it's a total
convergence," said Luis de la Calle, who was a chief Nafta
negotiator. "If you go to a supermarket in Mexico, the type
of products, the service they give you, it's just like you
find in the United States or Canada, in terms of variety,
quality and price."
Wal-Mart shoppers here have become attuned to the company's
smiley-face logo and its mantra of "Everyday Low Prices."
At a Mexico City shopping center, Plaza Tepeyac, José
Carrillo, 36, wended his way through the aisles on a
weekday morning, admiring how neatly the merchandise was
displayed.
"Sometimes I go to the street markets and sometimes I come
here," said Mr. Carrillo, an administrative aide, who lives
three blocks from a Wal-Mart. "Sure, I know Wal-Mart is a
multinational company, but what are you going to do? That's
globalization, and Mexico has to play the game, right?
Maybe some of the profit leaves Mexico, but Mexico gets
back some foreign investment, right? That's how things
work. It doesn't matter to me if I'm buying from a
multinational company, as long as they give me what I
want."
Wal-Mart opened its first American store in 1962 and
started its international expansion in 1991, when it began
to build and buy its way into Mexico. Half its Mexican
operations now are here in the capital, the other half in
cities across the country, from Tijuana to Cancún.
Its 81 Wal-Mart stores and 52 Sam's Club outlets now ring
up close to $6 billion a year. Annual sales at its Superama
and Bodega supermarkets approach $4 billion. Wal-Mart also
runs 52 Suburbia department stores and 267 Vips
restaurants, with close to $1 billion a year in sales.
Wal-Mart has also become the largest retailer in Canada,
and has outlets in Argentina, Brazil, Germany, South Korea,
Puerto Rico and Britain. The global expansion has helped
make it the world's biggest company in terms of revenues,
with $245 billion in sales last year - a sum greater than
the economies of all but 30 of the world's nations. Nowhere
outside the United States are its stores as numerous as in
Mexico, where the scope and scale of its operations have
grown to resemble its dominion in the United States.
Wal-Mart says that it treats its Mexican employees so well
that the workers want no union, and that it pays its
workers better than do its Mexican competitors.
However, in the United States, a unionized supermarket
worker makes, on average, about $19 an hour. At Wal-Mart,
where there are no unions, that worker makes about $9 an
hour. In Mexico, for a newly hired Wal-Mart cashier, the
pay stub reads about $1.50 a hour.
www.nytimes.com/2003/12/06/international/americas/06MEXI.html?ex=1
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