Tim Weiner
New York Times
Dec. 7, 2003 12:00 AM
MEXICO CITY
Wal-Mart, the biggest corporation in the United States, is the biggest private
employer in Mexico, with 100,164 workers on its payroll as of last week. Last
year, when it gained its No. 1 status in employment, it created about 8,000
positions, nearly half of the permanent new jobs in this struggling country.
Wal-Mart's power is changing Mexico in the same way it changed the U.S. economic
landscape, 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 & Co. "They've
changed the name of the game in Mexico."
In the United States and Western Europe, critics have accused Wal-Mart of driving
down wages, introducing cutthroat 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.
Under the influence of NAFTA, Mexico has become more like the United States,
moving away from making things to selling them. Manufacturing is migrating to
places like China, where wages are even lower than here. And nobody sells like
Wal-Mart.
Though it came to this country only 12 years ago, it 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 inflation rate.
Last year, 585 million people, nearly six times the population of Mexico, passed
through its checkout 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 almost 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, Farrell said.
"Wal-Mart has changed the retail market in Mexico," said Raul Arguelles,
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 cutthroat tactics.