US retail giant Walmart is selling its entire $3.7 billion stake in Chinese e-commerce platform JD as it shifts its focus to its business in China, but industry experts say the move will not affect the strategic partnership between the two companies, which will continue to maintain close business cooperation.
The two companies said the decision to sell the shares will enable Walmart to raise capital and focus on its core business in China, while the two parties will explore new models of cooperation in areas such as supply chain management, logistics and delivery, and digital services.
Walmart had no shares in JD as of Aug. 20, the Chinese company said in a filing with the Hong Kong stock exchange last week. JD also said it had full confidence in the future cooperation between the two companies.
Walmart said in a statement that JD has been a valued partner over the past eight years and that the U.S. retailer is committed to a continued commercial relationship with the Chinese e-commerce giant.
“This decision will allow us to focus on Walmart China and Sam's Club's strong China businesses and free up capital for other priorities,” Walmart said in a statement.
The partnership between the two companies began in 2016, when Walmart sold its Chinese online grocery store Yihao and acquired a 5% stake in JD, as part of a broader effort to gain a foothold in China's fast-growing online shopping market. The two companies also entered into a series of collaborations in retail and e-commerce, including fulfillment and delivery.
“Walmart's decision to sell its JD stake appears to be based on the company's strategy adjustment, asset optimization and response to market conditions. The move indicates that Walmart is reevaluating its asset portfolio to better adapt to market changes and the demands of its own business growth,” said Zhang Han, a senior researcher at the Pangoal Institute, a Beijing-based think tank.
Jiang said the cooperation between JD and Walmart is no longer limited to the equity level, but is moving toward a more flexible and diversified business cooperation model, potentially entering a new stage.
Jiang also said the U.S. retailer will maintain its commercial ties with JD, meaning that JD still plays an important role in Walmart's China operations, adding that JD's move to sell its shares will not have a significant impact on the established relationship between the two companies and could lead to new opportunities for cooperation in the long term.
By investing in JD, Walmart initially aimed to seize the opportunities presented by the rapid growth of China's e-commerce market, said Shen Meng, director at Beijing-based boutique investment bank Chanson & Co., adding that the emergence of new platforms has had a major impact on traditional e-commerce companies in recent years. Meanwhile, Walmart's decision to sell its stake in JD marks an adjustment in its China strategy.
Walmart is increasingly focusing on strengthening its China business, reporting that second-quarter revenue from its China operations rose 17.7% year-on-year to $4.6 billion, driven by strong growth in its Sam's Club warehouse chain and digital services.
The company's Sam's Club membership revenue in China grew 26 percent year-over-year as membership numbers continued to grow. The company currently operates 48 Sam's Club stores in China.
Fan Feifei@chinadaily.com.cn