Walmart offloads $3.7 bln stake in JD

U.S. retailer Walmart has sold its entire $3.7 billion stake in Chinese e-commerce platform JD and is shifting the focus to its operations in China, a move industry experts said will not have an influence on the strategic partnership of the two companies, which are willing to maintain close business cooperation in the future.

They noted that the stake sale decision will allow Walmart to raise capital and concentrate on its core business in China, while the two sides can explore new cooperation models in fields like supply chain management, logistics and delivery, and digital services.

Walmart had no equity stake in JD as of Aug 20, the Chinese firm said in a filing to the Hong Kong bourse last week. JD also said it is full of confidence in future cooperation between the two sides.

Walmart said in a statement that JD has been a valued partner over the past eight years, and the U.S. retailer was committed to a continued commercial relationship with the Chinese e-commerce giant.

"This decision allows us to focus on our strong China operations for Walmart China and Sam's Club, and deploy capital toward other priorities," Walmart said.

The partnership between the two companies began in 2016, when Walmart sold its Chinese online grocery store, Yihaodian, in return for a 5 percent stake in JD, as part of broader push to gain a foothold in China's rapidly growing online shopping market. They also carried out a series of tie-ups in the retail and e-commerce segments, covering fulfillment and delivery.

"Walmart's decision to sell its stake in JD seems to be based on its strategic adjustment, asset optimization and its judgment in accordance with the market environment. The move signals that Walmart is reassessing its asset portfolio to better adapt to market changes and its own business growth demands," said Jiang Han, a senior researcher at the Beijing-based think tank Pangoal Institution.

Jiang said the cooperation between JD and Walmart might have entered a new stage, as it is not limited to the equity level, but is shifting to a more flexible and diversified business cooperation model.

The U.S. retailer also said it will maintain a commercial relationship with JD, which signifies that JD still occupies an important position in Walmart's business layout in China, Jiang said, adding the move to sell JD's shares will not have a substantial impact on the established relationship between the two companies, and might bring about new cooperation opportunities for them over the long run.

Shen Meng, director of Beijing-based boutique investment bank Chanson &Co, said Walmart aspired to seize the opportunities brought by the rapid growth of China's e-commerce market by initially investing in JD, adding that the appearance of emerging platforms has had a great impact on traditional e-commerce enterprises in recent years, while Walmart's decision to sell its stake in JD indicates it is adjusting its China strategy.

Walmart has increasingly focused on building up its own China business. The company reported a 17.7 percent year-on-year increase in revenue from its China business to $4.6 billion in the second quarter on the back of strong growth in its Sam's Club warehouse chain and its digital offerings.

Membership income in China from its Sam's Club business grew 26 percent year-on-year as member counts continued to increase. The company currently has 48 Sam's Club stores in China.

fanfeifei@chinadaily.com.cn