Wal-Mart Stores Inc has taken full ownership of Yihaodian, a fast-growing Chinese e-commerce enterprise, by acquiring the 49 percent of the company that it did not already own, the U.S.-based retailer announced Thursday in a press release sent to the Global Times.
Yihaodian is a business-to-consumer e-commerce website that specializes in grocery products. Wal-Mart initially invested in Yihaodian in 2011 and gained majority control of it by raising its stake to 51.3 percent in 2012.
Yihaodian is a major component of Wal-Mart's long-term China strategy. Having full ownership of the e-commerce company will allow Wal-Mart to offer a seamless experience for customers across online, mobile and physical stores, Wal-Mart said in the press release.
Wal-Mart already allows customers to order products online via mobile devices and pick up their orders in stores or have them delivered, according to the press release.
With Yihaodian's over 100 million users and Wal-Mart's solid supply chain, Wal-Mart can offer shoppers more choices at lower prices via the online platform of Yihaodian, An Yuan, a public relations employee at Wal-Mart China, told the Global Times Thursday.
Wal-Mart's move is in line with China's policy of encouraging foreign investment in e-commerce. The Ministry of Industry and Information Technology approved in June the full foreign ownership of certain e-commerce businesses.
As many brick-and-mortar retailers face competition from virtual rivals, it is vital for Wal-Mart to explore the online market in China. The nation's e-commerce transactions grew 21.3 percent in 2014 to 12.3 trillion yuan ($1.98 trillion), overtaking the US as the world's largest online retail market, according to a report released earlier this month by domestic industry information provider cnii.com.cn.
Wal-Mart's major rival, Carrefour SA, has also ventured into the promising e-commerce sector in China, opening its own online shopping mall in June, a PR representative of Carrefour told the Global Times Thursday.
The online service is currently limited to Shanghai residents, but the company plans more moves in this sector, she said.
"It's the trend for brick-and-mortar retailers to expand into e-commerce, but nobody knows what the future holds," Chen Yuefeng, editor-in-chief of the China Chain Store magazine, told the Global Times Thursday.
Wal-Mart will do better than Carrefour in this area because Yihaodian has a larger user base and better online sales performance, Chen said.
Wal-Mart bought the remaining shares from Ping An of China, a financial services group, and two co-founders of Yihaodian - former Chairman Yu Gang and former CEO Liu Junling - who resigned "to pursue their next ventures" earlier this month. The two will continue to serve as strategic executive advisors of Yihaodian to facilitate the company's transition, according to a Wal-Mart statement.
