Wal-Mart Upgrades its Online Retail Investment in China

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By Erik Pineda | February 21, 2012 4:37 PM EST

U.S. retail giant Wal-Mart has ramped up its presence in the rising supermarket competition in China, adding to its portfolio local online seller Yihaodian.

According to Reuters, Wal-Mart increased its stakes on Yihaodian by no less than 51 percent though the company has been silent on the specific details of the deal.

The specific amount that changed hand for the sale was not provided by both Wal-Mart and Yihaodian though the biggest retailer in the world has indicated in a statement that the deal will be finalised once government regulators give their green light.

Yihaodian has already established solid presence in two major Chinese cities of Beijing and Shanghai and analysts viewed Wal-Mart's latest move as part of its efforts to play larger role on China's expanding e-commerce that last year alone had reportedly generated $118 billion in gross merchandise value.

"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," Wal-Mart Global eCommerce  chief executive Neil Ashe said in the statement.

The acquisition, analysts said, promises to be a good investment for Wal-Mart as Yihaodian already boasts of an in-placed e-commerce infrastructure that could meet the needs of the projected 173 million Chinese shoppers habitually purchasing products online.

To date, Yihaodian has a workforce of 5400 and its logistic reach spans the cities of Shanghai, Beijing, Guangzhou, Wuhan and Chengdu, Reuters said.

The online retailer sells groceries and other consumer products at competitive prices, which made it the leading player in the country's exploding online retail industry.

The company is also known for delivering orders within a 24-hour timeframe, Reuters said.

James Roy of China Market Research Group called the Wal-Mart decision as a positive move that leads to positive promises for the company, which is facing tough competition from Chinese and foreign retailers in the country.

"People who order from Yihaodian tend to be more premium customers and that is a decent direction for the company," Roy told Reuters.

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