Source: Li Jianqiu’s world (id:lijianqiudeshijie)
The national company law court of India NCLT rejected “Amazon’s request to the securities and Exchange Commission of India (SEBI) to withdraw its conditional approval for the future group to sell its US $3.4 billion retail assets to Reliance Industries”. The reason is that Amazon did not disclose the specific information of its previous acquisition of future retail to the court in an open manner during the investigation, and finally fined Amazon 2billion rupees, which must be paid within 45 days
Let’s talk about the context of this event:
India has a population of 1.4 billion, but the retail industry is relatively backward. American retailers have been coveting India’s huge retail market. American retailers, including Wal Mart, have been lobbying India to open the retail market and let companies such as Wal Mart enter
As early as 2007, Wal Mart announced with great fanfare that it planned to join hands with Bati group to open “hundreds” of supermarkets. Many multinational companies had such ambitious plans at the beginning of this century. The reason is very simple: there are 1.3 billion people in China, and almost so many in India. China is rising rapidly in the 21st century, so India will also rise rapidly in the 21st century. At this time, entering India and cultivating the market must be a big profit in the future.
All the way to 2012, India finally let go, and 10 states allowed retailers with foreign background to enter.
However, before Americans’ optimism lasted a year, Wal Mart gave up its expansion in India.
The reason is very simple: Although Wal Mart is very powerful in logistics, even the most powerful high-tech also needs electricity and roads.
In addition, the Indian government stipulates that foreign retailers must purchase 30% of their products from local small and medium-sized enterprises.
At the 2013 meeting, China’s exports were crushing the world, while India’s fragmented manufacturing and agriculture were unable to supply Wal Mart, a super retailer. At the same time, the Indian government was still investigating Wal Mart’s control of Bati retail by means of debt for equity swap. Wal Mart had intended to directly purchase 50% of Bati retail, which was a failure.
At that time, the Indian Congress party was still in power. At that time, the Indian people’s party was planning to overturn the Congress party, and there were nearly 50million small and medium-sized retailers in India, which was a vote warehouse that no party dared to offend.
As early as 2007, Amazon entered the Indian market by establishing a joint venture with local enterprises. The joint venture was closed in 2013, when Wal Mart officially entered India.
Wal Mart, on the other hand, is sad. Its sense of existence in India has basically stagnated.
With the advent of the mobile Internet era, Amazon has gradually expanded its market share in India. Like many developing countries, India has never experienced the PC era at all, and its transition to the mobile Internet is exceptionally smooth. Facing a market of nearly 1.4 billion people, all kinds of capital are fighting for market share as hard as adding a motor.
On may9,2018, Wal Mart purchased 77% of the equity of flipkart, India’s largest online retailer at that time, at a price of US $16billion, and increased its shareholding to 81.3% in December.
The two American companies began to compete fiercely for the huge e-commerce market in India.
Since modi came to power, he has been advocating localization. The enclosure of Wal Mart and Amazon in India has also affected the interests of local giants. Indian law stipulates that e-commerce companies cannot hoard inventory or sell directly to consumers. In order to circumvent this provision, Amazon cooperates with many local enterprises as Amazon’s actual “warehouse”.
In order to plug this loophole, in december2018, India announced that Amazon and Wal Mart were prohibited from selling their own brand products through their Indian websites, and special discounts or exclusive products were limited. Flipkart, owned by Amazon and Wal Mart, had to remove tens of thousands of goods from stores, and its voice in local subsidiaries continued to weaken.
In 2019, in order to support the domestic industry, the Indian government once again launched a campaign against foreign e-commerce companies. The draft e-commerce regulations emphasize data localization and require foreign enterprises to strengthen investment in the Indian market. The focus of the draft e-commerce regulations includes keeping data locally and requiring enterprises to set up more data centers and server centers in India.
Frequent targeting of foreign e-commerce has made Wal Mart and Amazon miserable.
Ambani is here
Amazon has long predicted that some domestic giants in India, such as Ambani, Tata and Adani, will not let go of e-commerce, especially Ambani. Reliance retail under Ambani’s reliance industry is the largest retailer in India, but reliance retail has no expansion in online business.
What happened was that Amazon was blocked by Indian laws and could not expand its offline business.
The second largest retailer in India is future retail, and future group controls 7.3% of future retail.
Amazon invested US $200million in a future coupons division of the future group to acquire 49% of its equity. Future group is the second largest retail chain enterprise in India, second only to Reliance Industries, the market leader. Amazon said that the deal was accompanied by some “non compete clauses”, which prohibited the future group from selling its retail assets to some competitors, including Reliance Industries Group, a subsidiary of India’s richest man Mukesh Ambani.
Even after signing the agreement, Amazon is still afraid that the courts in India will not pay attention to the agreement, especially in the agreement, if there is any dispute in the future, it will be submitted to Singapore for arbitration.
However, in 2020, affected by the COVID-19, the future group decided to sell its retail assets to Reliance Industries Group.
Amazon was furious: what it was afraid of was Reliance Industries’ intervention, so it angrily submitted it to the Singapore arbitration tribunal.
Based on Amazon’s evidence, the Singapore arbitration tribunal ruled in favor of Amazon.
Indian media clamored that a foreign arbitral tribunal should not be allowed to dominate the sale of Indian domestic assets to foreigners, and Indian courts must take over!
After Amazon prevented Reliance Industries from acquiring future retail with us $3.4 billion, future group backhanded accused Amazon of illegally interfering in its business decisions and damaging potential transactions, and appealed to the Supreme Court of India to revoke the approval of Amazon transactions in 2019, because Amazon made misleading descriptions when seeking approval.
Of course, the All India traders’ Federation supports Reliance Industries and opposes Amazon.
Since then, Amazon has been fighting a lawsuit with futuregroup until March 2022. Amazon can’t stand it: you pay me back the 200million dollars I invested in you at that time. That’s all
Future group said: the money is not enough now. The company’s financial situation is not good. The company suffered operating losses and could not afford to pay the rent. 835 retail stores were successively transferred to reliance group
Amazon was furious when it learned that: didn’t you treat me like a fool? Last month, it was said that the unpaid amount was only 2.5 billion rupees. How can we transfer 835 stores?
Ambani smiled: Amazon is brave enough to be fat. Isn’t it going to be judged? Come on, write a judgment to Amazon.
Finally, the first act happened. Amazon’s request to prevent Reliance Industries from acquiring future retail was rejected. Amazon could not get back the $200million it had invested in the future group. If the future group should sell assets to reliance group, it would still sell assets. Then Amazon was fined a large sum of money.
Dare to offend Ambani in India? Dare to calculate reliance group?
India has never been afraid of international capital, even American capital. It will kill one by one, and kill one by one.
Don’t frighten the Indians. They won’t dare to come if they say anything about international capital.
In the past, we killed too many people. After so many people were killed, haven’t you international capital climbed over?
It is said that India is hard – headed.