Retail giant Walmart (WMT) has decided to divest all of its shares and end its eight-year partnership with Chinese e-commerce platform JD.com (JD), a move that raises questions about the wider impact on China’s e-commerce landscape.

Brendan Ahern, Chief Investment Officer of KraneShares, joins Market Domination Overtime to analyze this development.

Ahern points out that domestic consumption in China has been “damaged” by COVID-19 and the “downward trend in housing prices,” which is negatively affecting China’s “domestic consumption.” This is negatively affecting major e-commerce players such as JD, Alibaba (BABA) and Pinduoduo (PDD), as Ahern describes it as a “more difficult area” overall.

Elaborating on the Walmart-JD partnership, Ahern explains that it lasted over eight years, but he believes Walmart is now so strong in China that “they don’t need a partner anymore.” Ahern even says the partnership has “encroached on JD’s core e-commerce business,” both online and offline.

Therefore, he does not interpret this move as an attempt by Walmart to withdraw from the Chinese economy. Rather, Ahern sees it as Walmart’s statement: “We have enough bandwidth to go it alone,” and characterizes the relationship with JD as a “friend-enemy relationship.”

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This article was written by Angel Smith