Walmart sells stake in JD.com to focus on its own China operations

Walmart has ended its eight-year partnership with Chinese e-commerce giant JD.com. Walmart announced on Wednesday the sale of its $3.7 billion stake in JD.com, marking one of the largest foreign investments in a Chinese retailer.

Despite the sale, Walmart will maintain a business relationship with JD.com. According to a securities filing, Walmart no longer owns shares in JD.com, though specifics on the number of shares sold and the proceeds were not disclosed. As of December 31, Walmart held 289 million shares of JD.com, which previously accounted for 9.4% of JD.com’s shares.

Walmart explained that this move allows the company to focus on its operations in China, including Walmart China and Sam’s Club, and to redirect capital to other areas. The company is committed to continuing its commercial relationship with JD.com.

“This decision allows us to focus on our strong China operations for Walmart China and Sam’s Club, and deploy capital towards other priorities,” Walmart said in a statement.

Bloomberg reported earlier that Walmart raised $3.6 billion from the sale, while JD.com’s Hong Kong-listed shares fell nearly 9% on the day of the announcement.

This decision highlights Walmart’s shift toward concentrating on its own business in China amid growing competition and price pressures from rivals like JD.com and Alibaba. The company’s exit from JD.com is part of a broader strategy to withdraw from markets where profitability has been challenging.

JD.com Headquarters (Credit:JD.com)

Walmart first invested in JD.com in 2016 by selling its Chinese online grocery business, Yihaodian, in exchange for a 5% stake in JD.com. The investment aimed to enhance Walmart’s presence in China’s competitive retail sector and boost its performance in physical stores.

The partnership included integrating Sam’s Club China with JD.com’s platform and utilizing JD.com’s distribution network for fast deliveries. However, since the pandemic, Walmart’s dependence on JD.com has lessened as more consumers turned to Sam’s Club for bulk purchases.

Looking ahead, Walmart plans to increase its international merchandise sales to $200 billion over the next four years and is preparing for the IPO of its digital payments platform PhonePe and Flipkart marketplace in India.

The sale of JD.com shares is also significant as it represents Kathryn McLay’s first major move since becoming CEO of Walmart’s international division and comes amid increasing trade tensions and geopolitical uncertainties affecting U.S.-China relations. Western companies, including Walmart, are diversifying investments and sourcing to countries like India, Pakistan, and Bangladesh to strengthen their supply chains.

Founded in July 1998 by Liu Qiangdong, JD.com stands as China’s top technology-driven e-commerce powerhouse. The company’s advanced retail infrastructure allows consumers to shop for products anytime, anywhere. JD.com extends its technology and infrastructure to partners, brands, and various sectors through its Retail as a Service initiative, fostering productivity and innovation across different industries. As China’s largest retailer and a Fortune Global 500 company, JD’s revenue for the twelve months ending June 30, 2024, was $153.800 billion.