JD.com, Wal-Mart Ink Strategic China Pact

China’s B2C online retailer JD.com and America's largest retailer Wal-Mart, have agreed to a strategic alliance across China through a combination of e-commerce and retail.

Wal-Mart operates 430 stores in China
Wal-Mart operates 430 stores in China

Under the agreement, Wal-Mart will sell its Chinese online e-commerce marketplace, Yihaodian, to JD.com, the country’s No. 2 e-commerce player, in an all-share deal. In exchange, JD.com will issue Wal-Mart stock amounting to about 5% of its total shares, worth roughly US$1.5 billion based on JD.com’s recent share price.
There are only about 430 Wal-Mart stores in China, a tiny presence compared to the 4,000+plus stores in the US, and the deal with JD.com, second only to Alibaba in China, is expected to greatly expand its opportunity in China e-commerce. It will provide its stores with potential traffic from JD.com’s base of online customers and same-day delivery network to serve its customers.

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China has become Wal-Mart’s fourth biggest marketplace
JD.com will leverage the Yihaodian’s brand and business in eastern and southern China and in key product categories such as high-quality grocery and household goods, both of which complement its own geographical and product strengths. In addition, JD.com’s customers will gain access to a wide range of new and imported items from Wal-Mart.
China is Wal-Mart’s fourth biggest international market by sales, though last month executives said there were significant challenges in that market and that its e-commerce performance in China and other markets had been a drag on the company’s overall online growth. In the first quarter, Wal-Mart’s global e-commerce rose a modest 7%.

Nol van Fenema

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