Walmart is expanding its own interests in China.
According to a Bloomberg report, the supermarket giant sold its stake in JD.com for $3.6 billion.
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A Walmart spokesperson stressed that the company remains “interested in a continued business relationship” with JD, but indicated that the move comes at a time when Walmart is rethinking its own strategy for the Chinese market.
“This decision allows us to focus on our strong China operations for Walmart China and Sam’s Club and deploy capital to other priorities. We look forward to continuing to serve customers and members in China and around the world,” the spokesperson said in an emailed statement.
According to JD.com’s latest shareholder report, Walmart owned 9.4 percent of the company’s shares as of February 2023. Reuters reported that Morgan Stanley brokered the deal.
Walmart reported in its recent earnings call that international markets were positive for the company. The company highlighted China as the main reason for its international growth. According to the company, it saw an 8.3 percent increase in constant currency sales growth internationally, which it attributed to its offerings in Mexico, China and India – Walmex, Walmart China and Flipkart.
In addition, the company has expanded its logistics capacities in China.
“In China, we increased the number of e-commerce orders delivered within one hour by 28 percent to 59 million orders,” said John David Rainey, Walmart’s chief financial officer, during the company’s last quarterly earnings conference call.
In addition to Walmart expanding its business in China on its own, competition for extremely low-priced goods in Asia could intensify due to strong market saturation.
This year, China’s 618 Festival – an e-commerce holiday that encourages huge discounts and high volumes of shopping by consumers – saw its first drop in sales in at least eight years. JD.com launched the shopping holiday in 2010 to celebrate its founding date: June 18, 1998.
But even though the festival was launched by JD, rival Alibaba outsold it on the day of the festival, data from Syntun shows. Alibaba’s platform Tmall secured a larger share of the festival’s gross merchandise volume (GMV), leaving JD.com as consumers’ second choice, just ahead of PDD Holdings’ Pinduoduo.
Last week, JD.com announced that its second-quarter revenue increased 1 percent year-on-year.
JD, Alibaba and Pinduouo are trying to convince customers with seemingly impossibly low prices and persuade them to buy from them instead of their competitors. In July, there was reportedly a bidding war between Alibaba and JD.com for the British parcel service Evri.
JD did not respond to Sourcing Journal’s request for comment, but according to the New York Times, the company said it had bought back $390 million worth of its own stock to boost its share price. The Times further reported that a spokesman said JD remained “fully confident in future cooperation between the two sides,” but did not provide details on what that would look like.
