JD.com’s Hong Kong-listed shares fell 10 per cent to HK$101.10 at 2.23pm local time on Wednesday, leading a broader sell-off in Chinese e-commerce and tech stocks.
Walmart is refining its strategy in the world’s second-largest economy, where its long-standing e-commerce partner is struggling along with major rivals Alibaba Group Holding and PDD Holdings, owner of Pinduoduo and Temu. Alibaba owns the South China Morning Post.
JD.com has been engaged in an escalating price war in China with major e-commerce rivals, including Alibaba Group Holding and budget retailer Pinduoduo. Photo: Shutterstock
The US firm has built a mature e-commerce and delivery system in mainland China for both Sam’s Club and its hypermarkets business, and is focusing on its own offerings, a person familiar with the matter said, speaking on condition of anonymity.
“I expect Walmart will be disappointed with the horse they backed,” said Mark Tanner, managing director at marketing agency China Skinny. “It doesn’t feel like the original ambitions have quite panned out as planned at the time of acquisition.”
Representatives for Walmart, JD.com and Morgan Stanley did not immediately respond to requests for comment.
A group of shoppers from Hong Kong buy multiple carts of goods in a Sam’s Club hypermarket in Qianhai, Shenzhen. Photo: Eugene Lee
Walmart said the decision to reduce its shareholding would allow it to focus on its own businesses in China and allocate funds to other priorities, according to a report on Wednesday by Shanghai-based online media Cailian.
The US retailer’s Sam’s Club franchise has been a bright light for the company, making it the only hypermarket chain to post sales growth last year among the top five players, according to the China Chain Store & Franchise Association. In mainland China, the unit offers premium goods with a membership model that is now being copied by rivals, while its basic hypermarkets are struggling along with competitors.
Meanwhile, China’s biggest internet firms are trying to reverse a decline, as economic uncertainty and consumers’ shifting shopping habits weigh on earnings. Last week, Alibaba – long a barometer for the industry – surprised investors when it revealed its main commerce business actually shrank in the June quarter.
A Walmart shopper in Beijing checks out a promotion for the first JD-Walmart 8.8 omnichannel shopping festival on August 8, 2017, across mainland China. Photo: Walmart
JD.com’s June-quarter results beat expectations – even though revenue grew a mere 1.2 per cent. That extended a string of single-digit quarters dating back to 2022, a period of malaise that has halved the firm’s market value since the start of last year.
The Walmart-JD break-up also follows a pattern of online and offline retail businesses dissolving their partnerships, as earlier ambitions to seamlessly merge the physical and cyber consumer experiences failed to be realised. Earlier this year, Bloomberg reported that Alibaba is considering selling its Intime department store arm.
Walmart’s sale of JD.com shares would mark the end of a partnership between the two companies that started when the US retailer acquired a 5 per cent stake in the Chinese company in 2016.
That deal also involved JD.com taking over Walmart’s Yihaodian online marketplace, which focused on selling groceries to higher-end female shoppers in major Chinese cities, the companies said then. Later that year, Walmart increased its holdings in JD.com to 10.8 per cent.
