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Walmart Accelerates E-Commerce Plans in China
Walmart has acquired the remaining 49 percent of shares in Yihaodian’s as part of its plan to distribute its products to Chinese consumers through its online service.
The Bentonville, Arkansas-based company, which has boosted spending on e-commerce investment, acquired the remaining shares from Ping An of China, a financial services group, and co-founders, former Chairman Gang Yu and former CEO Junling Liu. It says Yihaodian would be led by Wang Lu, President and CEO of Walmart Global eCommerce in Asia.
Yihaodian has excelled as one of China’s top e-commerce businesses and President and CEO of Walmart Global eCommerce, Neil Ashe says they’re “excited about the team at Yihaodian and their strong local e-commerce experience”.
“This local experience, combined with Walmart’s global sourcing and our strong local retail presence and supply chain will allow us to deliver low prices on the products customers need in new and exciting ways.
“Our investment in Yihaodian is part of our long-term commitment to grow in China and we look forward to continuing to play a positive role in the development of the e-commerce industry.”
In 2012, the US company took control of Yihaodian by bumping up its stake of the online supermarket to 51 percent. After a year, the Chinese retail company became the top five online retail stores with 57 million registered users and US$1.9 billion yearly gross sales. At this time, Yihaodian has eight million products with 100 million registered consumers.
In addition to seeking a higher profile in e-commerce, Walmart said the purchase of the stake will help the company to create a seamless experience for customers across online, mobile and stores. Investing on Yihaodian is just one of Walmart’s plans to influence the Chinese market, allowing it to reach Chinese customers ordering products through mobile and online.
The world’s biggest retailer has been building up its online business in the wake of mediocre sales in the US, and as a direct challenge to online competitor Amazon which just posted profits, surpassing Walmart in value.
Walmart’s move comes after China said it will allow full foreign ownership of some e-commerce businesses, with the goal of encouraging foreign investment and the development and competitiveness of the sector. A report released from consulting firm Accenture and AliResearch, the research arm of Chinese e-commerce giant Alibaba Group, says there will be more than 200 million cross-border online consumers in China in 2020, the most of any country. The strong demand from China’s growing middle class will boost cross-border online purchases to about $245 billion in five years.