Mexican CPG companies hope to slow Wal-Mart with legislation

Consumer packaged goods (CPG) suppliers in Mexico are lobbying to have the Mexican Congress pass an "ethics law" to stop Walmex from bankrupting hundreds of small businesses, according to Manuel Tron, president of Mexico's National Chamber of Commerce. "Walmex" is the name retail giant Wal-Mart Stores Inc. uses for its Mexican operations.

"We are seeing Walmex grow in a very major manner and have complaints not only from small shop owners but from large supermarket chains, as well. This company is gaining enormous influence that is having a major effect on competitors," says Tron.

"We must have legislation to control this growth. We understand this is something we're not going to have overnight, but we are talking to the lawmakers about it. There are many associations of small merchants discussing the issue with authorities, and we intend to do the same."

According to Ernesto Hisaki, a spokesperson for yogurt producer Yakult, any ethics legislation should be aimed not just at Walmex but at other large supermarket chains as well since, he claims, they are forcing local suppliers to sell at a lower price than they do to other distributors.

"If we don't accept their terms, they hurt us with poor point-of-sale displays or just outright stop buying from us," notes Hisaki.

Maribel Fernandez, president of the Mexican Gift Manufacturers Association, says an ethics law must require chains to reserve a certain percentage for purchases of "made in Mexico" products. Bulk purchases, particularly from China, are displacing Mexican manufacturers.

"In Europe 50% of all purchases are devoted to local suppliers," claims Fernandez, "but Mexico's supermarket chains can refuse to use a similar scheme here if there is no legislation forcing them to do so. Today the percentage of Mexican products being sold is very low. Consumers prefer to buy Chinese articles, which represent 64% of what is being sold in the gift field."

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