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Walmart has cut its stake in Chinese e-commerce giant JD.com to zero as the world’s largest retailer focuses on expanding its brands in the country.
The US retailer disclosed in a filing with the US Securities and Exchange Commission that it has sold its entire nearly 10 percent stake in the e-commerce company.
Walmart reported owning 289 million shares of JD.com as of December 31, worth $4 billion at the close of trading in New York on Tuesday.
JD.com said it spent $390 million to buy back its own shares in a deal on Wednesday. Shares of the Hong Kong-listed conglomerate fell as much as 12 percent in early trading.
Walmart first bought a stake in the company in 2016 in exchange for the sale of Chinese e-commerce site Yihaodian to JD.com. Walmart nearly doubled its stake later that year by investing further in the Chinese company.
The deals advance growing collaboration between the two retailers, including Walmart and its Sam’s Club unit launching stores on JD.com’s e-commerce platform and delivery partnerships in several Chinese cities.
But JD.com has faced growing e-commerce competition in China from rising rival Pinduoduo as well as Alibaba. Goldman Sachs analysts estimate that PDD has now replaced JD.com as the second-largest e-commerce company in China.
JD.com grew revenue 1 percent year-on-year in the second quarter, bolstering net profit by cutting discounts offered to shoppers.
“Walmart invested nearly 10 years ago when JD.com and the e-commerce market were growing very fast,” said Li Chengdong, director of China tech research group Haitun. “The stake allowed them to learn from JD. Now they are doing well in China themselves, so the strategic value of the stake is over.”
Walmart has increasingly focused on building its business in China, with its Sam’s Club warehouse stores increasingly popular with cost-conscious Chinese consumers.
The US retailer said it would maintain its partnership with JD.com and that the sale “allows us to better focus on our strong China growth, including our Walmart Supercenter and Sam’s Club operations, while reallocating assets to other priorities”.
The company added that it “achieved success in many markets around the world by adjusting its asset portfolio in a timely manner.”
The group’s sales in China rose 16 percent to $17 billion in the most recent fiscal year ended January 31, although the market contributed less than 4 percent of total sales.
Walmart’s stake sale comes after JD.com’s other major partner, Chinese social media giant Tencent, sold almost all of its 17% stake in the company to shareholders in 2022.
JD.com did not immediately respond to a request for comment.
Additional reporting by William Sandlund in Hong Kong
