International Trade in Services.pdf - DSpace at Khazar University

146 International Trade in Services
Box 5.3: Selected Developing-Country Experiences in the Distribution
Service Sector
In Africa, supermarkets, hypermarkets, and large discount stores started to expand
abroad in the mid-1990s. South African retailers were the first to establish themselves
in foreign markets; they were soon followed by Kenyan retailers. African foreign
direct investment (FDI) has targeted the retailing sectors in Botswana, Namibia,
Swaziland, Zambia, and Zimbabwe, and, more recently, Angola, Ghana, Madagascar,
Mauritius, Mozambique, Tanzania, and Uganda (Weatherspoon and Reardon 2003).
In 2003, South Africa’s formal retail sector was made up of 70,000 stores. Of these, 2
percent were supermarkets and hypermarkets that controlled 55 percent of the
country’s food retailing market.
In the Arab Republic of Egypt, the distribution services sector is relatively
unorganized and fragmented. A significant proportion of the retail sector consists of
small stores that supply a wide range of goods without a particular customer target
group. Publicly owned retailers account for 42 percent of all establishments and
dominate sales of fuel, gas, food, beverages, and tobacco. Many of the stores have
low returns and survive because of their access to inexpensive, low-skilled labor.
Retailing is concentrated in Greater Cairo and Alexandria, where most foreign retailers
are active. In 2003, there were 3,900 commercial agents representing 105,200
foreign companies because commercial agents and importers have to be Egyptian
nationals. Wholesale and retail services accounted for 11 percent of GDP in 2005/06
and employed nearly 13 percent of the labor force, of which 89 percent were men
(Dihel and El Shinnawy 2006).
Retailing in China has, in a relatively short time, been transformed from stateowned
operations and traditional small shops to modern hypermarkets. Domestic
companies dominate the supermarket segment, and foreign companies dominate the
hypermarket segment in big cities. Sales by foreign department stores account for less
than 5 percent of total consumer goods sales and about 10 percent in major cities.
In 2006, wholesale and retail trade accounted for over 7 percent of GDP, employing
51 million people and representing an accumulated net FDI of US$129 billion
(17 percent of total FDI) (WTO 2008a).
In Latin America, the share of supermarkets in retail sales rose from 20 percent
in 1990 to over 50 percent in 2002. For groceries, the supermarket share ranges
from as high as 63 percent in the Philippines and 33 percent in Indonesia, Malaysia,
and Thailand to 5 percent in India and Nigeria (UNCTAD 2005). In 2007, Guyana’s
wholesale sector comprised a mix of domestic and foreign companies, while the
retail sector consisted of small domestic operations. Anecdotal evidence indicates
that the foreign sources for the wholesale and retail trade emanated mainly from
the Caribbean (Carana Corporation 2008).
In Thailand, following the 1997 financial crisis, divestments by Thai investors
enabled European and U.S. companies to enter the local market for distribution
services. The new competitors built a few hypermarkets and supermarkets offering a
wider range of products, as well as cash and carry outlets for good value. These
establishments displaced many mom-and-pop stores, which led to a tense political
situation (WTO 2002).