Wal-Mart is selling Yihaodian, its Chinese e-commerce business, to JD.com, and teaming up with the buyer to increase market share. Bobbi Rebell reports.
Wal-Mart is selling its Chinese e-commerce business, Yihaodian. The buyer, JD.com, the second-largest online store in China after Alibaba will issue shares to Wal-Mart representing about 5 percent of the outstanding stock. The deal also calls for a strategic alliance to better their chances in the country's cutthroat retail market. The deal is a rescue for Wal-Mart, says Euan Rellie, senior managing director at BDA Partners. (SOUNDBITE) EUAN RELLIE, SENIOR MANAGING DIRECTOR, BDA PARTNERS, (ENGLISH) SAYING: "Wal-Mart was really struggling to get e-commerce right in China. Actually, arguably, to get the physical stores right. It's really a cut-throat market. Overall market growth has shrink down to five or six percent. And it's just a wildly competitive market as well. Local retailers are getting into e-commerce and, I think, Wal-Mart figured out quite wisely that it couldn't win by itself." Rellie says, the alliance is really a battle for market share. Yihaodian specializes in online grocery sales, an increasingly competitive a market in China. JD has built a reputation on selling brand-name electronics, but it's been branching out into selling food, with investments in a produce retailer and deals with milk companies.