Walmart Dumps Stake in JD.com to Focus on Its Own Business in China
Walmart’s expanding its own interests in China.
The superstore giant sold its stake in JD.com for $3.6 billion, according to Bloomberg reporting.
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A spokesperson for Walmart noted that it remains “committed to a continued commercial relationship” with JD, but indicated that the move comes as Walmart rethinks 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 towards 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.
JD.com’s latest shareholders report stated that Walmart held 9.4 percent of the company’s shares as of February 2023. Reuters reported that Morgan Stanley brokered the deal.
Walmart reported in its latest earnings call that international markets were working favorably for it. The company highlighted China as a main reason for the company’s international growth. According to the firm, 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, respectively.
It has also been ramping up its logistics capabilities in China.
“In China, we increased e-commerce orders delivered within one hour by 28 percent to 59 million orders,” John David Rainey, Walmart’s chief financial officer, said on the company’s latest earnings call.
On top of the fact that Walmart is independently advancing its business in China, competition for ultra-low-priced goods may be heating up in Asia due to heavy market saturation.
This year, China’s 618 festival—an e-commerce holiday that spurs huge discounts and high volumes of consumer shopping—saw its first sales drop in at least eight years. JD.com launched the shopping holiday in 2010, as a celebration of its founding date: June 18, 1998.
But even though the festival was created by JD, competitor Alibaba edged the company out on the day of the festival, data from Syntun showed. Alibaba’s Tmall platform grabbed a higher volume of the gross merchandise volume (GMV) from the festival, leaving JD.com as consumers’ second choice, just ahead of PDD Holdings’ Pinduoduo.
Last week, JD.com announced its second quarter revenue had grown by 1 percent year on year.
JD, Alibaba and Pinduouo have worked to capture consumers by offering seemingly impossibly low prices, encouraging consumers to shop with them instead of their competitors. In July, Alibaba and JD.com were said to be in a bidding war over UK parcel service company Evri.
JD did not return Sourcing Journal’s request for comment, but according to the New York Times, the company said it had bought back $390 million of its own shares to help boost its stock price. The Times further reported that a spokesperson said JD remained “full of confidence in the future cooperation between the two sides,” though it did not share details about what that would look like.