Wal-Mart raises stake in Chinese e-commerce firm

Summary:U.S. retail giant to up its stake in Yihaodian to 51 percent to fend off growing competition in Chinese e-commerce market.

Wal-Mart said on Monday it is upping its stake in Chinese e-commerce firm Yihaodian, in a bid to seek new revenue sources to fend off rising competition.

The U.S. retail giant said that its investment in the Yihaodian will give it a majority shareholding of approximately 51 percent. The deal is subject to government regulatory approval, according to a statement on the firm's Web site released on Monday. Wal-Mart did not provide financial details of the deal and it is not clear how much stake it currently has in the Chinese firm.

Yihaodian operates a logistics network in Shangihai, Beijing, Guangzhou, Wuhan and Chengdu and has 5,400 employees. It serves a growing customer base with same-day and next-day delivery of essential daily items at competitive prices.

"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," Neil Ashe, president and CEO of Wal-Mart global e-Commerce said in a statement.

He added that the investment would enable Wal-Mart to deliver a better customer experience to Chinese consumers that were already connected to the world through smart phones and social media, creating a "unique" shopping experience for them.

China is likely to be the world's most valuable e-commerce market in the next four years, as found in a Boston Consulting Group (BCG) research paper last November. With 173 million Chinese people shopping online, its e-commerce industry was forecasted to surpass 750 billian yuan (US$118 billion) in gross merchandise value in 2011.

"E-commerce has been booming for years in China and in many other sectors, and it has only been very recently that it is for supermarket type of goods," James Roy, senior analyst at China Market Research Group said in a Reuters report on Monday. "It is a good investment for Wal-Mart as it has a lot of potential."

Over the past year, Wal-Mart has made various ventures into the social media space acquiring technology provider Kosmix, Small Society and OneRiot.

Topics: CXO, Browser, E-Commerce, Social Enterprise

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Elly grew up on the adrenaline of crime fiction and it spurred her interest in cybercrime, privacy and the terror on the dark side of IT. At ZDNet Asia, she has made it her mission to warn readers of upcoming security threats, while also covering other tech issues.

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