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April 9, 2008

INDIA: Carrefour to “delay” entry into India

Carrefour CEO Jose Luis Duran said today (9 April) that the French retail giant is looking to "delay as much as possible" its decision on entering India.

Carrefour CEO Jose Luis Duran said today (9 April) that the French retail giant is looking to “delay as much as possible” its decision on entering India.
 
The company has been talking to at least three potential partners over a cash-and-carry venture in India, where government regulations limit foreign investment into the country’s fast-growing retail sector.
 
The Indian government currently bars overseas retailers from investing directly in the country’s retail industry but a number of multinational groups, including Wal-Mart and Metro Group, have set up local joint ventures.
 
Speaking at the World Retail Congress in Barcelona, Duran said those regulations meant Carrefour needs to take time to find the “right partner” as the company would have less direct control over any operations in India.
 
“We are happy to be one of the biggest franchisees all over the world but in India it is a completely new adventure and a new business model. I am often asked: ‘Why have you delayed again your decision three months more?’ I make it very clear: I am going to delay as much as possible until I find the right partner beacuse it is a completely different enviornment.”
 
India’s retail market is estimated at around US$350bn, a figure set to grow and, as well as attracting attention from overseas, a number of home-grown retailers, including Reliance Retail and Pantaloon Retail have been busy expanding across the country.
 
Duran acknowledged that India’s burgeoning retail sector represents a “huge, long-term opportunity” but insisted he wanted to take time before finalising the company’s entry into the country. “I think it’s worth investing time before rather than afterwards. India is going to be very challenging in the short- and medium-term but a huge opportunity in the long run – say ten, 15, 20 years.”
 
China represents a key emerging market for Carrefour and the retailer has invested heavily in building a presence in the country since it first entered in 1995. Duran, however, warned that inflationary pressure in China’s fast-growing economy was the “main challenge” for retailers in the country.
 
“It’s a matter of fact that the growth opportunities in China are completely different to those that we face in the more mature European markets,” Duran said. “But it is true that the challenges are very important as well. The inflationary issue is the main challenge that we have to face together.”
 
Poor weather in China, including the worst snowstorms in half a century, has damaged crops and driven up commodity prices. According to government figures, food costs soared 23% in February, driving a 8.7% rise in general inflation.
 
“Here in Europe, we are scandalised by a 3-4% inflation rate,” Duran added.

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