Amazon $6.5 Billion in India Could Not Buy THANKS
The trade minister of India is not wowed by Amazon’s new $1 billion investment in the country. With this extra $1 billion, bringing the total the ecommerce giant has pumped into India to $6.5 billion, the trade minister, Piyush Goyal, said Amazon’s investment was not a big favor to his country. Simply, you are here because we have done the right things in India, and never think you are coming to save us!
Amazon’s marketplace arm alone reported a loss of about $800 million in the fiscal year ending March 2019, according to regulatory filings. “How can a marketplace make such a big loss, unless they are indulging in predatory pricing or some unfair trade practices? These are the real questions that need answers,” Goyal said.
Nigeria needs to read playbooks from Indian and Chinese governments on how to relate with global ICT utilities like Google, Amazon and Facebook. Here, $50million would have activated Atilogwu, Ebi, Eyo, Nupe, etc dancers to the "saviours". Sure, this does not mean that we should not appreciate foreign investments. Yes, we need to say THANKS but we must not be carried away.
My point is this: no foreign investor comes here to play ludo - thank them but continue to fundamentally improve your country as that is really the only thing that matters to these investors.
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Comment: If only Amazon had invested $6.5 billion in the U.S. market, we would have fewer good and decent American Citizens standing in line for food stamps. I don't care what anybody says, it is wrong for an American company to make billions of dollars in income, and not pay a single dollar in U.S. taxes. The United States needs a 'Flat Tax' so nobody gets away with benefiting from American Capitalism without giving something back to the people who protect American Capitalism with our blood on the battle field. I said it before, and I will say it again, Amazon is the reason why so many tax paying Americans hate U.S. corporations who do not pay any taxes. In my opinion, Americans pay taxes to protect our way of life, our systems of government, and our freedoms we love. In my opinion, if any U.S. corporation does NOT WANT to pay their fair share of taxes, then they should not be allowed to sell their products and services in the United States. In my opinion, this part of the American Tax system is broken, and needs to be fixed if we are to survive and prosper as a Powerful Nation. After all, it was U.S. Government taxes that created the Internet, and without the Internet, there would not be a company called Amazon. - Sir William
My Response: Sir, this is very complicated. You need to thank India for allowing Amazon to invest. Why? Amazon's market cap of above $900 billion has priced the Indian emerging market exposure. The impact of this $6.5b could be multiples in Amazon valuation. I estimate the bump in cap to be at least $90b. Technically, Amazon is "shipping" $6.5b but investors are adding $90b to its market cap. That $90b goes to Americans and America, not Indians.
Let me give you a secret: the best time to buy shoes, shirts, belts, etc is the last week of every quarter because that is when SALES goes highest as companies try to meet sales target with discounts. I used to have a table on the best week to shop in JC Penney, Gap, Sears by watching their closing quarters.
This is the game: ABC Company can do a sales discount of $10m ("wasting $10m") but that would help it meet store targets, beating Wall Street expectations. Magically, that $10m could help to add $200 million in a company's market cap because Wall Street looks at same store sales (most times), not profits! Amazon is doing America a great deal by investing in India because that money is returning more valuation to pension funds, hedge funds, etc which invested in Amazon.
Ambitions differ, we haven't demonstrated that we have big ambitions here, so we celebrate small feats with festivals and dance; that's our story for now.
We are still trying to crack the code on FDI, because we don't seem to have anything investors look out for, so we keep organising road shows and tours, just to beg them to come.
Once we know what we are doing, the fat dollars will start running after us, for now we have been consumed by local politics and internal squabbles; such that we do not know where the rest of the world are.