Walmart has cut its stake in Chinese ecommerce giant JD.com to zero, as the world’s largest retailer focuses on expanding its own brands in the country.
The US retailer disclosed in a filing to the US Securities and Exchange Commission that it had entirely disposed of its nearly 10 per cent holding in the ecommerce company.
Walmart reported owning 289mn shares of JD.com as of December 31, which would have been worth $4bn at the end of trading in New York on Tuesday.
JD.com separately said it had spent $390mn repurchasing its own shares in a transaction on Wednesday. Hong Kong-listed shares of the group fell by as much as 12 per cent in early trading.
Walmart first acquired a stake in the group in 2016 in exchange for the sale of its Chinese ecommerce site Yihaodian to JD.com. Walmart nearly doubled its holding later that year by continuing to invest in the Chinese group.
The deals spurred growing collaboration between the two retailers, including Walmart and its Sam’s Club unit launching stores on JD.com’s ecommerce platform and a delivery partnership in some Chinese cities.
But JD.com has faced growing ecommerce competition in China from rising rival Pinduoduo as well as Alibaba. Goldman Sachs analysts estimate that PDD has now displaced JD.com as the second-largest ecommerce company in China.
JD.com increased revenues 1 per cent from a year earlier in the second quarter, bolstering its bottom line by cutting back on the discounts offered to shoppers.
“Walmart invested nearly 10 years ago when JD.com and the ecommerce market were growing really fast,” said Li Chengdong, the head of Chinese tech think-tank Haitun. “The stake allowed them to learn from JD. Now they are doing well on their own in China, so the strategic value of the stake has ended.”
Walmart has increasingly focused on building up its own China business, with its Sam’s Club warehouse outlets gaining popularity among China’s discerning, cost-conscious shoppers.
The US retailer said it would maintain co-operation with JD.com and that the sale “allows us to better focus on the strong development of China, including the operation of Walmart Supercenter and Sam’s Club, and allocate assets to other priorities”.
The company added that it “has achieved success in various markets around the world by adjusting its asset portfolio in a timely manner”.
The group’s China business sales grew 16 per cent to $17bn in its latest financial year ended January 31, though the market contributed to less than 4 per cent of total sales.
Walmart’s share disposal comes after JD.com’s other major partner, Chinese social media group Tencent, distributed nearly all of its 17 per cent stake in the group to shareholders in 2022.
JD.com did not immediately respond to a request for comment.
Additional reporting by William Sandlund in Hong Kong