Walmart ends partnership with JD.com to focus on its own China business

Walmart Inc. has enjoyed such success due to its strong China business that the company has dissolved a long-standing local partnership – an outsider in a consumer landscape that is increasingly hostile to foreign brands.

While other Western consumer goods giants are leaving China or losing market share to local rivals, the U.S. retailer remains the company’s largest hypermarket operator, thanks largely to Sam’s Club, a chain that offers premium goods and is open to members only. The franchise continues to post double-digit sales gains, Walmart executives said on a conference call this month, and half of all sales in China are digital.

Booming demand for Sam’s Club allowed Walmart to develop its own e-commerce app – a rarity in China, where major Western retailers mostly rely on local platforms such as Taobao and Alibaba Group Holding Ltd.’s Tmall. The number of e-commerce orders delivered within an hour rose 28 percent to 59 million in the last quarter, the company said. And Sam’s Club’s membership model has been so successful that it has been copied by some competitors.

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“Customers are responding positively to the increased convenience we are getting from expanding our pickup and delivery capabilities,” Chief Financial Officer John David Rainey said on the conference call.

Walmart stands out not only in the supermarket space, but across China, where both foreign and local companies are facing a drop in demand due to the economic slowdown. The company was the only one of China’s five largest hypermarkets to see sales rise last year. France’s Carrefour SA closed more than 140 stores on the mainland in 2023, leaving just four, while Britain’s Tesco PLC has exited the market entirely.

The company is also bucking the trend of once-successful Western brands struggling in China. Starbucks Corp. is currently exploring its own strategic partnership as local rivals gain ground, and Nike Inc. has softened its China forecast amid growing consumer nationalism.

Eight years ago, Walmart needed the e-commerce infrastructure of technology giant JD.com Inc. Today, while Walmart still relies on JD.com’s courier services, it has built its own logistics infrastructure, including an app and an expanded warehouse network.

“Walmart and JD may still work together, but Walmart has actively built up its e-commerce infrastructure, making it less dependent on JD,” said Jason Yu, managing director of Kantar Worldpanel Greater China, which tracks consumer spending.

Walmart sold its entire stake in JD.com this week, raising about $3.6 billion, reflecting confidence that the company can now rely entirely on itself in China. Walmart is currently reviewing its portfolio and deciding where to invest, including in its own technology and capabilities, according to a person familiar with the matter. The retailer will continue to focus its business on China, which is one of its international growth markets along with India and Mexico, the person said.

Walmart did not immediately respond to a request for comment Thursday.

The collapse is another blow to China’s tech giants as an economic slowdown and a drop in consumer spending weigh on profits. Shares in JD.com, which is battling rivals such as Alibaba and Temu owner PDD Holdings Inc., fell in Hong Kong after news of the sale broke.

“The e-commerce landscape has changed significantly since Walmart first partnered with JD.com,” said Mark Tanner, managing director of marketing agency China Skinny. After the sale, “Walmart can double its focus and capital on Sam’s Club because that is its main focus in the market and offers the greatest potential.”

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