LONDON/NEW YORK, Nov 29 (Reuters) – Walmart (WMT.N) is increasing imports of goods from India to the United States and reducing dependence on China as it seeks to cut costs and diversify its supply chain, Reuters said. This was revealed by the data obtained. .
The world’s largest retailer shipped a quarter of its U.S. imports from India between January and August this year, according to bill of lading figures shared with Reuters by data firm Import Yeti. compared to just 2% in 2018.
According to the data, only 60% of shipments came from China during the same period, down from 80% in 2018. Indeed, China remains Walmart’s largest importer of goods.
The changes show that rising import costs from China and escalating political tensions between the U.S. and China are prompting major U.S. companies to increase imports from countries such as India, Thailand and Vietnam.
In the U.S., shoppers are facing rising interest rates and soaring food prices that are eroding household savings and making Walmart and other retailers cautious about the outlook for consumer spending.
“We want the best price,” Andrea Albright, Walmart’s executive vice president of procurement, said in an interview. “That means we need resilience in our supply chain. We deal with everything from hurricanes and earthquakes to raw material shortages all the time, so we can’t depend on any one supplier or geography for our products. ”
Walmart said in a statement that the bill of lading data represents a portion of what the company procures and that creating redundancy “does not necessarily mean reducing” its reliance on the procurement market. “We are a growing company and are committed to sourcing more manufacturing capacity,” Walmart said in a statement.
Albright said India has emerged as a key component of Walmart’s efforts to build manufacturing capacity.
Walmart has been accelerating its growth in India since acquiring a 77% stake in Indian e-commerce company Flipkart in 2018. Two years later, the company pledged to import $10 billion of goods annually from India by 2027. Albright said the company remains on track to achieve this goal. Currently, it imports approximately $3 billion worth of goods from India each year.
Labor and technology are key
Wal-Mart imports a variety of products from India to the United States, from toys and electronics to bicycles and medicine, Albright said. Processed foods, dry grains and pasta are also popular imports from India, she added.
India, whose stock market has soared to record highs this year, is seen as the country most capable of surpassing China in low-cost, large-scale manufacturing.
Albright said a rapidly growing workforce and advances in technology are attractive to Walmart. Meanwhile, China last year reported its first population decline in 60 years.
Walmart started its sourcing operations in Bangalore in 2002. Currently, the company employs more than 100,000 people in the country, including temporary employees, spread across multiple offices under Walmart Global Tech India Division, Flipkart Group, Fonpe and Sourcing Operations .
Walmart CEO Doug McMillon met with Indian Prime Minister Narendra Modi in May, and Modi called the meeting “fruitful.”
On May 14, Prime Minister Modi posted on X (formerly Twitter) that he was “delighted to see India emerging as an attractive investment destination,” and McMillon said that Walmart “continues to support the growth of India’s manufacturing industry.” and create opportunities.”
Walmart rival Amazon (AMZN.O) announced this month that it aims to export $20 billion worth of goods from India by 2025.
Freewill Sports, a small Indian soccer ball supplier, was one of the beneficiaries, Rajesh Karabandha, the company’s chief executive, said in an interview.
Rising costs of shipping goods from China are also contributing to the switch to India, supply chain experts say.
“Rising labor costs relative to other manufacturing locations make sourcing from mainland China less competitive,” said Chris Rogers, research analyst at Panjiva, S&P Global Market Intelligence’s supply chain analysis group. “I am doing so,” he said.
Minimum wages in China vary from province to province and sometimes city to city, ranging from 1,420 yuan to 2,690 yuan ($198.52 to $376.08) per month. Meanwhile, the average wage for unskilled and semi-skilled workers in India ranges from about INR 9,000 to INR 15,000 ($108.04-$180.06) per month, according to estimates by the Central Bank of India.
Supply chain failure
The COVID-19 pandemic has exposed weaknesses in global supply chains and shown U.S. importers to be overly reliant on a small number of markets.
“Planning for a geopolitical event is like planning for a hurricane,” Albright said. “What I can control is where the product comes from and how I can make sure we get Christmas even if something happens in the supply chain.”
Pakistan and Bangladesh are also benefiting from Walmart’s strategy, Albright said, expanding as a supplier of household goods and apparel products.
Last year, at least eight freewill shipments headed to Walmart warehouses from Gujarat’s Mandla port, India’s largest civilian port, according to U.S. import data.
“There is new confidence in India’s manufacturing industry and the availability of factory infrastructure,” Freewill CEO Rajesh Harabanda said in an interview.
India’s central bank expects the country’s economy to expand by 6.5% this fiscal year. China is expected to grow by about 5% this year.
“There has certainly been a bigger impact in the last 12 to 18 months,” said Shekhar Gupta, whose family business, Devgiri, has been selling floor coverings to Walmart for about 10 years. “That’s when Walmart really started developing a strategy to put India at the center of its growth.”
(1 dollar = 7.1528 Chinese Yuan)
(1 dollar = 83.3050 Indian rupees)
Reporting by Richa Naidu and Siddharth Cavale. Additional reporting by Casey Hall and Manoj Kumar.Editing: Matthew Scafham, Sharon Singleton
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