This contribution to the discussion on the impact of foreign direct investment indeveloping countries is based on an empirical study of the consequences oftransnational corporations' presence in the Mexican retailing sector, particularlyWal-Mart. First, it is shown that the arrival of foreign firms accelerates themodernisation but has a negative impact on local firms' performance as well as localworker remuneration as a result of the growing competitive pressure in the sector.Second, the changes that occurred in supply chain governance and the tremendousincrease of imports initiated by Wal-Mart are described, and some probableimplications for local suppliers are suggested.