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Walmart mulls $1.2-bln investment in China as trade tension de-escalates

Continuing the efforts to bring innovation in its business and stay relevant in rapidly changing retail industry, Walmart (WMT) this week announced a significant investment in China as part of ramping up its logistics services. In a move that complements its growing interest in Asia, the department store operator recently had struck deals with business tie-ups in India for entrepreneurial talent acquisition.

According to a statement published by the company on social media, it plans is to invest approximately $1.2 billion in China, which includes the opening of around ten logistics centers. Through the initiative, Walmart intends to join Chinese technology and e-commerce companies like Alibaba (BABA) and Tencent in combining the operations of its brick-and-mortar and e-commerce businesses.

Interestingly, Walmart’s announcement about the measures to expand the China business comes on the heels of the US and China reaching a trade war truce at the G8 summit in Japan. Probably the company is being extra cautious after the unpleasant experience in India where its ambitious tie-up with local e-tailer Flipkart suffered a setback recently, due to regulatory issues.

The company plans to invest approximately $1.2 billion in China, which includes the opening of around ten logistics centers

Of late, China’s retail industry has been witnessing a drastic transformation that is being referred to as “smart retail.” European retailers such as Carrefour are busy revising their business models to adapt to the changing market scenario in China.

Also see:  Wal-Mart Q4 2019 Earnings Conference Call Transcript

Having launched its China operations more than two decades ago, Walmart has a significant presence in the local market, with dozens of stores and a Global Sourcing Center. The partnership with local e-commerce company JD.com (JD) a few years ago was a major milestone in for the company’s China operation.

After surging to an all-time high last month, Walmart shares traded slightly lower during Monday’s regular session. The stock gained 18% so far this year and 31% in the past twelve months

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