Strategy

Wal-Mart Doubles Stake in China’s JD.com

Four months after acquiring 5.9% of JD.com, Wal-Mart has become the third largest shareholder in the Chinese e-commerce company.
Matthew HellerOctober 7, 2016
Wal-Mart Doubles Stake in China’s JD.com

Wal-Mart has almost doubled its stake in JD.com, becoming the third-largest shareholder in China’s second-largest e-commerce company.

In a regulatory filing, Wal-Mart disclosed it now owns 265 million shares in JD.com, or 10.8% of shares that don’t have extra voting power, up from the 5.9% stake it obtained by selling Yihaodian, its Chinese online marketplace, to JD in June.

The increased stake is just short of the level that would allow Wal-Mart to gain observer status at JD.com’s board meetings. JD’s two largest shareholders are Tencent, China’s dominant social networking company, which has a stake of 21.25%, and founder Liu Qiangdong, who owns 16.2%.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

“The stepped-up investment in JD has been part of our plan, as we continue to be a passive investor,” a a Wal-Mart spokeswoman said. “We believe this strategic alliance will help us grow e-commerce even faster in China.”

As The Wall Street Journal reports, the sale of Yihaodian reflected Wal-Mart’s shift in strategy to “seeking to navigate China’s competitive e-commerce market as an investor in a major local player, rather than trying to expand its own online shopping platform.”

“China has surpassed the U.S. as the world’s largest e-commerce market. But it is a challenging market for foreign players, as the country’s fast-growing online shopping sector is dominated by domestic competitors like JD.com and Alibaba Group Holding Ltd., China’s largest e-commerce company,” the WSJ explained.

At JD’s closing price of $27.40 on Thursday, Wal-Mart’s stake was worth more than $7.2 billion. Last month, the retailer was reportedly in advanced talks with India e-commerce company Flipkart for an investment of about $1 billion.