Bullets From Bangkok
Mr Lim, a third generation Chinese Thai, and his family manage to keep their 20-year-old, rundown ‘kirana’ shop open despite poor sales. Last year, in this now affluent part of Bangkok’s Klong Toey district, a brightly-lit 7-Eleven convenience store, open 24 hours, sprang up right opposite his home-cum-shop, and now has a steady flow of customers. Lim doesn’t entirely blame these “Sevens”, as they are known here, for the decline of his business. He notes a larger change in the architecture of the locality and the wider city itself. “There were only a few high-rise condos in this area 15-20 years ago. The last 10 years have seen a noisy, dusty construction boom.” Scores of apartment blocks have come up in the area, formerly on the margins of tourist-infested Sukhumvit Road. “These residents would rather go to Tesco or Big C, the two largest multi-brand retail chains in Thailand today.”
In the next soi (street) is Daily Needs, an Indian shop run by a family of Thai Sikhs, whose sales have increased at an impressive pace in the past five years. It serves the many Thai-Indians and expat Indians living in this area, saving them a lot of trouble procuring their dal, atta, spices, even Indian veggies. It expanded last year, now retailing sweets and savouries, even samosa and chat. Mrs Narang, a Thai citizen, remarks with a smile, “No supermarket, not even the Sevens, offers that in all of Bangkok.” She buys fresh food and veggies at a weekly market or a wet-market and only visits the supermarkets for packaged food and “cleaner” chicken. And most vendors of the famous Thai ‘street food’ sector—some 300,000 roadside eateries and small restaurants— still get almost all their fresh vegetables, meat and fish from large ‘talats’ or wholesale wet-markets and the sauces, rice and noodles from hypermarkets.
Suthira, a mother of two from a high-income household, shops at an upscale supermarket less than a mile from home, where imported farm products include perfectly shaped, 300 gram apples from Japan sold at an equivalent of $6 a piece and local fruits and vegetables at several times the price offered at a wet-market close by. She is, however, discerning in her weekly purchases. “I go with a clear list of grocery items and don’t get distracted by the promotions,” she says. “In this humid weather, I enjoy my visit to this air-conditioned place, and you know what, since I spend at least a 1,000 Baht they provide free home delivery within a couple of hours. Isn’t that attractive?”
At roughly 300 stores per million people (similar to Malaysia and Singapore), compared to an average of 50 in Vietnam or Indonesia, plus online shopping, the Thai multi-brand retail scenario is comparable to that in the US or west Europe. All its formats permeate the city: cash and carry (usually wholesale), monstrous hypermarkets, supermarkets, smaller “express” shops, the ubiquitous “Sevens” and their main competitor, Family Mart, that dot almost every Bangkok soi. Big retail currently handles close to half the total value of a retail trade worth around $480 billion. Wet-markets and traditional grocery stores account for the other half, but with a relatively lower rate of growth, this share is projected to fall.
MNCs like Tesco (UK) and Grand Casino (France)—though curiously not Walmart—found an easy entry into the Thai retail ecosystem after the 1997 financial crisis. FDI rules from the ’70s, when Thailand was under military rule, allowed foreign equity over 50 per cent, with a high discretionary element in permissions. Legislation in 1999—in the wake of the crisis—repealed that and permitted foreign firms to hold up to 60 per cent of equity, with a caveat to ensure there were Thai companies competing in the sector.
In 2007, Thailand’s first Retail Act was drafted, aimed at balancing the interests of modern and traditional retailers by restricting hypermarket expansion. The legislation remains in draft form. A recent newsreport raised serious concerns about the decline of “mom-and-pop shops” and called for the speeding up of retail legislation with clear zones for modern outlets. The report quoted Thanavath Phonvichai, vice-president of the University of the Thai Chamber of Commerce, “If mom-and-pop shops do nothing now to adapt and innovate, they will certainly go out of business. If nothing is done, big retail’s marketshare will likely increase to 60 per cent in five years.”
Economist Pasuk Phongpaichit sees FDI in retail as perhaps inevitable due to the degree of complexity involved in modernising the sector. “A cost to be borne to enable the sector to transit from traditional to modern,” she says, warning that “effective legislation concerning urban zoning, monopolistic malpractices and labour issues is a prerequisite”.
FDI in retail is no longer a contentious domestic issue. Local capital proved no pushover: in the past decade, they have wrested a big share of the pie and the sector is clearly oligopolistic in character. They were strong enough to drive out French giant Carrefour in 2010. In fact, in preparation for the ASEAN Economic Community (effective 2015), the focus is on outward FDI in ASEAN and also India.
Yet, there is a recognition that big retail does not merely bring about greater convenience, choice or quality, but an entire reconfiguring of the shopping act. Its sheer architecture, identical whether in Tampa or Taipei, offering the pleasure of driving a shopping cart through rows of goodies, is not merely intended to organise and facilitate, but to induce ‘excess’. Bangkok has seen the impact big retail has on people’s lives: not just altering their preferences as consumers, but affecting lifestyles in unanticipated ways.
But now the battle has shifted scales. The threat to old stores comes not directly from big supermarkets, but from a proliferation of the smaller convenience store found in almost every Bangkok soi: like 7-Eleven, the Japanese-owned chain whose Thai patent is held by local giant, CP Group.. These cater to almost every daily household need, dairy items, baked products, confectioneries, newspapers, cosmetics, tobacco, alcohol, what have you. A large proportion are franchises, not independently owned; just the smaller end of modern retail, conducted and completely controlled by larger chains. There are some 6,500 “Sevens” in Thailand, half in Bangkok. A massive expansion of this format is occurring due to legal limitations on the hypermarket format. Tesco Lotus is focusing on the smaller express format to circumvent these.
Thai retailing has lessons for countries embarking on modernising the sector. The small country was unable to resist “an invasion” due to a financial crisis. But for India, with the second largest Asian market, to liberalise FDI in retail on unfavourable terms and conditions, when a serious economic meltdown afflicts the industrialised world, seems bizarre.
Sriram Natrajan in Bangkok with Khun Tavee and Tiraphap FakthongSriram Natrajan is an independent economics research professional based in Bangkok
Edited online to fix typos on Sept 30.
Apropos The Thai Message, consumers want their interests taken care of, FDI notwithstanding. If a particular retail format suits the Indian consumer, and we can achieve economies of scale, let us welcome such a format. Are consumers not more important than traders? Also, if instead of foreign capital, our own companies are able to manage the supply chain and are allowed to market produce without interference from Agriculture Produce Marketing Committees, the decision to allow FDI in retail can be revoked.
Narendra M. Apte, Pune
India just does not know its economy! Most of it is in the self-employed sector—whether it be farmers, retail shopowners or tradesmen. If we lose our self-employed class to the MNC chains, wages across the board will fall. The organised sector is too small to absorb the shock of the self-employed looking out because they’ve lost their piece of the pie to a biggie. The pressure on the job market is going to rise many folds in the time to come.
The tragedy here is that almost everyone is looking at FDI in retail from the perspective of the kirana store owners. Everything will fall into place, with full clarity, the moment we starting viewing it from the consumer’s perspective.
Aseem Swarup Johri, Toronto
Thank you to all those who have taken the trouble to read the article and share their thoughts. Out of the arguments made here, there are two that perhaps need answering. So here they go.
1. The first part of the article compares outcomes (relative percentages of population of the religions concerned) irrespective of the process that led to those outcomes - whether immigration, relatively faster population growth or conversions. This was for two reasons. One, to put the figure of 2.3 per cent in "numerical perspective", as the article itself explained. The second reason was that outcomes are ultimately what the crux of debate is about. The rest of the article in any case dealt with process - or conversions in this case, from both a contemporary and historical perspective.
2. Some commenters have tried to cast doubts on the reliability of Census 2001. Those who do this should bear in mind that Census 2001 was conducted by a BJP government. Considering the extreme importance that BJP gives to this issue, it would be reasonable to expect that IF it had perceived a problem with the methodology that was distorting the numbers, it would have fixed it. As the article mentioned, BJP or BJP-supported governments have been in power for 10 of the last 40 years, or about a quarter of the time, and the only reasonable conclusion one can arrive at is that any misreporting of numbers, real or perceived, would be marginal and hence, not of importance.
To all other arguments made, my answer is the following: Please read the article again, with particular focus on the quotations of Vivekananda and Monier Williams, and the history of the missionary efforts in Bengal and their outcome.
@V.Shivakumar....very valid point. Just as at road toll both, the cashiers are supermarkets are busy doing their job. They cannot slur else they risk losing their job, as they are seen as representing their company.
FDI supermarkets will be a hit in india as they do not racially discriminate. the neighbourhood kirana shops behave badly if you belong to the 'wrong" community or caste. the kirana shop bania opposite mother diary booth in front of deshbandhu college in kalkaji, new delhi, used to make unsavoury comments about my south indian community.
When Potato was being sold for record price in Delhi last year, farmers in UP merely 100 kms away were dumping potato on the road, due lack of good price. Who is responsible for this ?
Having said that there are a lot of assumptions regarding FDI especially that FDI would build the supply chain infrastructure from the scratch. None of that has been put on the paper.
There is dire need to straighten out the supply chain in India. FDI may or may not bring that about.
Perhaps at the risk of being odd man out , I will still rant my feelings……The mail culprit of high price of goods is the network of stockists to distributors to wholesalers and retailers , there are at least 3 to 5 levels between a producer and the ultimate retail user ,this is the big issue of added costs, and the layers must be eliminated to reduce costs. I believe as long as we have no issue of FDI in wholesale(which is the case) …it’s good for the country, but , its sure shot trouble if FDI in retail is allowed, it means ownership of big/hyper bazars by large MNC’s in place of present day family owned shops ………..today, a large segment in India is self-employed, therefore, the organised jobs market does not see so much of pressure. If god forbids we see loss of self-employed class to the MNC operated major chains , than the wages across the board will fall as these very self-employed would be willing to do the same job for half the wages of organised job market.
We live in fool’s paradise, India just does not know its economy! Most of it is in the hands of self-employed sector …..be it Farmer, retail shop holder…a tradesman etc….the organised sector is too small to absorb the shock…of self-employed seeking a pie…on account of losing out to a bigie ! The pressures on urban sector today is because of farmers selling their land and settling in cities and towns…the pressure on job market is going to be many folds in times to come
Aseem writes "Here in North America, there is a thumb rule, the bigger the store the cheaper the goods."
It is not just because of scale but because of competition (and of course scale).
That is the reason why Metro in Bangalore isn't so attractive in pricing unlike say a Costco in US - lack of competition. Not to mention Metro is supposed to be limited to B2B but of course a visit will tell you there is enough B2C.
Univeral experience is that pricing and quality is about competition (and of couse regulation that ensures one doesn't get cartelized competition).
We at Outlookindia.com welcome feedback and your comments, including scathing criticism
1. Scathing, passionate, even angry critiques are welcome, but please do not indulge in abuse and invective. Our Primary concern is to keep the debate civil. We urge our users to try and express their disagreements without being disagreeable. Personal attacks are not welcome. No ad hominem please.
2. Please do not post the same message again and again in the same or different threads
3. Please keep your responses confined to the subject matter of the article you are responding to. Please note that our comments section is not a general free-for-all but for feedback to articles/blogs posted on the site
4. Our endeavour is to keep these forums unmoderated and unexpurgated. But if any of the above three conditions are violated, we reserve the right to delete any comment that we deem objectionable and also to withdraw posting privileges from the abuser. Please also note that hate-speech is punishable by law and in extreme circumstances, we may be forced to take legal action by tracing the IP addresses of the poster.
5. If someone is being abusive or personal, or generally being a troll or a flame-baiter, please do not descend to their level. The best response to such posters is to ignore them and send us a message at Mail AT outlookindia DOT com with the subject header COMPLAINT
6. Please do not copy and paste copyrighted material. If you do think that an article elsewhere has relevance to the point you wish to make, please only quote what is considered fair-use and provide a link to the article under question.
7. There is no particular outlookindia.com line on any subject. The views expressed in our opinion section are those of the author concerned and not that of all of outlookindia.com or all its authors.
8. Please also note that you are solely responsible for the comments posted by you on the site. The comments could be deleted or edited entirely at our discretion if we find them objectionable. However, the mere fact of their existence on our site does not mean that we necessarily approve of their contents. In short, the onus of responsibility for the comments remains solely with the authors thereof. Outlookindia.com or any of its group publications, may, however, retains the right to publish any of these comments, with or without editing, in any medium whatsoever. It is therefore in your own interest to be careful before posting.
9.Outlookindia.com is not responsible in any manner whatsoever for how any search engine -- such as Google, Bing etc -- caches or displays these comments. Please note that you are solely responsible for posting these comments and it is a privilege being granted to our registered users which can be withdrawn in case of abuse. To reiterate:
a. Comments once posted can only be deleted at the discretion of outlookindia.com
b. The comments reflect the views of the authors and not of outlookindia.com
c. outlookindia.com is not responsible in any manner whatsoever for the way search engines cache or display these comments
d. Please therefore take due caution before you post any comments as your words could potentially be used against you
10. We have an online thread for our comments policy:
You are welcome to post your suggestions here or in case you have a specific issue, to directly email us at Mail AT outlookindia DOT com with the subject header COMPLAINT