H. Kong retail sales inch up in June '25    Egypt's SCZONE breaks ground on $55m Chinese textile projects in Sokhna    Egypt's FM, US envoy discuss Gaza ceasefire, Iran nuclear talks    Japan's c. bank holds key interest rate    Egypt's Electricity Ministry says new power cable for Giza area operational    Egypt exports first high-tech potato seeds to Uzbekistan after opening market    Modon Holding posts AED 2.1bn net profit in H1 2025    Egypt's Al-Sisi, Italian defence minister discuss Gaza, security cooperation    Egypt's FM discusses Gaza, Nile dam with US senators    Aid airdrops intensify as famine deepens in Gaza amid mounting international criticism    Health minister showcases AI's impact on healthcare at Huawei Cloud Summit    On anti-trafficking day, Egypt's PM calls fight a 'moral and humanitarian duty'    Egypt strengthens healthcare partnerships to enhance maternity, multiple sclerosis, and stroke care    Egypt keeps Gaza aid flowing, total tops 533,000 tons: minister    Indian Embassy to launch cultural festival in Assiut, film fest in Cairo    Egyptian aid convoy heads toward Gaza as humanitarian crisis deepens    Culture minister launches national plan to revive film industry, modernise cinematic assets    Sudan's ambassador to Egypt holds reconstruction talks on with Arab League    I won't trade my identity to please market: Douzi    Sisi sends letter to Nigerian president affirming strategic ties    Egypt, Senegal sign pharma MoU to unify regulatory standards    Two militants killed in foiled plot to revive 'Hasm' operations: Interior ministry    Egypt, Somalia discuss closer environmental cooperation    Egypt's EHA, Huawei discuss enhanced digital health    Foreign, housing ministers discuss Egypt's role in African development push    Egypt reveals heritage e-training portal    Three ancient rock-cut tombs discovered in Aswan    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Egypt's Irrigation Minister urges scientific cooperation to tackle water scarcity    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Wal-Mart lets down China online strategy, starts again with stake in Alibaba rival
Published in Amwal Al Ghad on 21 - 06 - 2016

Wal-Mart Stores Inc has sold its Chinese online grocery store in return for a stake in the country's no. 2 e-commerce firm, ripping up its previous strategy in efforts to cure ailing sales in one of the world's toughest retail markets.
The deal will see the U.S. grocery giant swap its Yihaodian platform for a 5 percent stake in JD.com Inc, worth about $1.5 billion by the firm's latest market value. The move also gives Wal-Mart a ringside seat in JD.com's bitter rivalry with Chinese e-commerce leader Alibaba Group Holding Ltd.
The sell-off, announced on Monday, is a significant shift for Wal-Mart in China, where it operates more than 400 bricks-and-mortar stores. The firm has been shuttering underperforming outlets and grappling with soft online sales in the world's second-biggest economy since it bought full control of Yihaodian in July last year, saying the site would play a leading role in its China strategy.
"The reality is that e-commerce is hyper-competitive in China and it is tough for any platform to make money," said Ben Cavender, Shanghai-based principal of China Market Research Group. "Selling up in return for a 5 percent stake in JD.com is a good way of staying in the space while reducing the risk."
The deal echoes a strategy adopted by other international retailers and consumer goods makers - selling a local unit for a stake in a Chinese partner in order to prosper in a cut-throat marketplace. France's Danone SA sold its Dumex brand last year to raise its stake in local dairy giant China Mengniu Dairy Co Ltd.
Wal-Mart's tie-up gives it access to JD.com's nationwide logistics and warehousing networks, as well as its over 150 million users - helping expand the U.S. firm's reach with China's increasingly tech-savvy middle class.
For JD.com, the deal could provide a boost in its intensifying competition in the fast-growing online grocery business with Alibaba - a market set to boom to nearly $180 billion by 2020 from $41 billion last year, according to data from food research body IGD.
Under the deal, JD.com will issue around 145 million new class A shares to Wal-Mart. JD.com will take ownership of Yihaodian, although the platform will continue to be operated by Wal-Mart.
The world's biggest retailer had previously talked up Yihaodian as playing a key role in turning around its China business. Wal-Mart has worked to turn around falling same-store sales in China, where the firm said in May it was facing a "challenging macroeconomic environment".
Analysts said that while Wal-Mart would give up a large amount of control and potential future profits from the business, the tie-up would allow the U.S. firm to concentrate on turning around its offline stores.
"It doesn't mean that (Wal-Mart has) pulled away, but to me it tells me they are trying to make smarter investments," said Edward Jones analyst Brian Yarbrough.
Wal-Mart's financial adviser on the deal was Morgan Stanley & Co LLC and its legal advisor was Morrison & Foerster LLP. JD.com's legal advisors were Orrick Herrington Sutcliffe LLP and Han Kun Law Offices.
Source: Reuters


Clic here to read the story from its source.