Walmart just lost its third country head in Asia in two years

June 26, 2013
Obsession
How We Buy
June 26, 2013

Walmart’s attempt to make inroads in India have received yet another setback. Raj Jain, the chief executive of Walmart’s India joint venture, resigned after six years at the helm; no reason was given. Walmart has now seen three CEOs in its Japan, China and India markets leave in the last two years.

Walmart’s 50-50 joint venture with Bharti Enterprises, which is controlled by Indian billionaire Sunil Mittal, has faced a series of setbacks of late. India is one of four countries (Brazil, Mexico and China are the others) where Walmart is investigating claims that its people bribed local officials in violation of the US’s Foreign Corrupt Practices Act. In November it suspended several top executives of the India venture, including the chief financial officer.

Some of Walmart’s investments in India have come under the Indian regulators’ scanner too. The Enforcement Directorate, the agency that monitors foreign exchange norms, is investigating Walmart’s investments into Bharti’s subsidiaries for alleged violations of foreign investment rules.

Walmart’s India expansion plans have also been hobbled by regulations designed to keep foreign supermarket chains from competing with Indian businesses. The joint venture operates just 20 stores in India; only last September did the Indian government approve 51% foreign direct investment in stores that sell multiple brands. But the clearance came with many caveats, including one that gives state governments the final say on letting such foreign-controlled stores open up.

Walmart’s operations in China and Japan have encountered obstacles too. The CEO of the Japanese venture quit (paywall) in 2011 after the company posted losses for seven straight years. And the Walmart China CEO quit in October 2011 after sluggish sales and store closures by regulators. Two senior vice presidents left in May, shortly after a string of food scandals forced the company to invest 100 million yuan ($16.3 million) to strengthen food-safety management in stores.

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