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Wal-Mart To Take Controlling Stake In Chinese ECommerce Firm Yihaodian

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World's largest retailer Wal-Mart Stores, Inc. (WMT: Quote) agreed Sunday to boost its stake in the holding company of Chinese eCommerce company Yihaodian to about 51 percent in its bid to continue establishing itself in the eCommerce market. The closing of the deal is subject to Chinese governments regulatory approval. No financial details on the deal are revealed by Wal-Mart.

"This investment further enables Walmart to deliver a superb customer experience to Chinese consumers that are already connected to the world through smart phones and social media. We are on track to create the next generation of eCommerce, offering the latest in online innovations to give our customers a unique shopping experience," Neil Ashe, President and CEO of Walmart Global eCommerce, said in a statement.

Chinese insurance giant Ping An Insurance Co. took a controlling stake in Yihaodian in May 2010, acquiring an 80 percent stake in the online retailer.

Ruisheng Sheng, spokesperson for Ping An Group, said, "Ping An welcomes the investment from Walmart. We continue to be a strategic investor in this exciting eCommerce business."

Exactly a year later, Wal-Mart made its initial strategic investment in Yihaodian, acquiring a 20 percent minority stake in the company for about $65 million in May 2011. Wal-Mart said while making the initial investment that online sales in China are growing rapidly and are projected to match U.S. online sales in the next few years.

Yihaodian, a massive B2C e-commerce company based in China, offers over 180,000 products on everything from computers and electronics to groceries. The company has a significant footprint in the online grocery industry, and features other popular categories like Baby and Mom, toys, and apparel that come with the promise of next-day delivery and competitive prices.

Yihaodian is expecting the deal to enable it to improve customer experience and operational efficiency by using Wal-Mart's excellence in supply chain and also its nearly 50 years of retailing experience and history.

"Our further investment in Yihaodian demonstrates that we are committed to investing in China in a key growth industry and developing all that goes with it: logistics, infrastructure, innovative talent and new technologies that will help China meet its development goals," Ashe added.

Wal-Mart had first forayed into the Chinese market when it opened its first store there in 1996 and it has reached 189 stores in 101 cities across China. More recently, Walmart also acquired a 35 percent stake in Bounteous Co., operator of hypermarkets in China under the Trust-Mart name.

WMT closed Friday's regular trading session at $62.48, up $0.44 or 0.71% on a volume of 8.19 million shares.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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