Money Matters, Simplified.
Wal-Mart to pick up stake in China's e-commerce company
by Jamie Anderson - May 15, 2011 - comments
Wal-Mart entered China in 1996 by opening its first Supercenter in Shenzhen. Now, the world’s largest retailer is increasing foothold in the Chinese market by acquiring a minority stake in Yihaodian, a Chinese e-commerce company.
Online sales in China are rising really fast and, in the coming years they are expected to equal online sales in the United States.
To cash in on this opportunity, Wal-Mart Stores Inc (WMT.N), the world's biggest retailer, has forayed into this domain and has acquired a minority stake in Yihaodian, a Chinese e-commerce company.
The financial details of the transactions have not been divulged by the companies.
The transaction, expected to consummate within 60 days, is likely to help Wal-Mart expand internationally through the online route.
"By investing in Yihaodian, we're continuing to establish a presence in this important e-commerce market, and are moving forward on fulfilling our aspiration of being the leading global multichannel retailer."--Eduardo Castro-Wright, CEO of Walmart Global eCommerce and Global Sourcing
Strategic move
Yihaodian, which offers over 75,000 items, including groceries and consumer electronics, boasts of 2,000 employees on board.
The e-commerce set-up has a logistics network based in Shanghai, Beijing, and Guangzhou.
"By investing in Yihaodian, we're continuing to establish a presence in this important e-commerce market, and are moving forward on fulfilling our aspiration of being the leading global multichannel retailer," Eduardo Castro-Wright, CEO of Walmart Global eCommerce and Global Sourcing, said of the rationale behind acquiring the stake in Yihaodian.
Meanwhile, Wal-Mart's robust supply chain management is likely to help Yihaodian attain a competitive edge in the e-commerce industry of the world’s most populous country.
The web-site has already made rapid strides in terms of growth since its inception in July of 2008. As on date the Shanghai based company has approximately 1 million registered users.
Yihaodian offers next-day delivery at competitive prices to its customers.
Wal-Mart in China
Founded by American retail legend Sam Walton in Arkansas, Wal-Mart today operates more than 8,400 units in 15 countries including the United States, Mexico, Canada, Brazil,Argentina, China, the UK, Japan, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Chile, and India.
Estimates reveal that the world’s largest private employer serves more than 200 million customers every week.
Wal-Mart set foot on the Chinese soil in 1996 when it opened the first Supercenter and Sam’s Club in Shenzhen.
In 2007, Wal-Mart bought a 35 percent stake in Trust-Mart. The U.S retailer now has 333 stores in China including 104 stores operated by Trust-Mart.
Currently, Walmart has annual sales of $419 billion. The additional channel in China should take the sales figure further north. At least that’s what the Wal-Mart’s honchos would be hoping for.