To compete against domestic rivals and growing online retailers, Walmart has announced plans in investing over a billion dollars into its Chinese business. The American retail giant reportedly plans to inject around $1.2 billion in its Asian distribution infrastructure over the next 20 years to boost its delivery capabilities.
In a statement released to the media, the company's head of international logistics, Ryan McDaniel, revealed that the substantial investment will be used to increase the firm's supply-chain logistics in order to ensure that customers get the freshest products possible.
The Arkansas-based retailer has already invested a substantial amount in establishing its Chinese distribution centers intended for perishable grocery items. The company currently has facilities located in the south of China, which is actively delivering to customers who are ordering their groceries online.
Walmart has been operating in China since 1996 and has been the leading groceries provider in the country. The company currently has 433 supermarkets in China, which is a mix of its Walmart-branded stores and its membership-only subsidiary, Sam's Club. Walmart has been facing stiff competition from local startups and online retailer giants such as Alibaba, which has also started offering online grocery services.
To get ahead of its larger competitors in the digital space, Walmart had partnered with one of China's biggest tech firms JD.com in 2016. Walmart also made a big investment in various delivery startups, including a $300 million investment in the Chinese delivery firm Dada-JD Daojia.
Walmart CEO Doug McMillon stated in the firm's investor conference last month that he thinks China will provide the company with its biggest business opportunity yet. McMillon explained that they will be heavily focusing on developing their business in the region in the years to come.
Walmart reported around $10.7 billion in Chinese sales last year, with aims to further increase that number in the coming years. Walmart recently had to raise its prices on a number of its offerings due to the ongoing trade war between China and the United States. Walmart was one of 600 companies that wrote to US President Donald Trump, requesting him to put an end to the trade war with China.
Not be outdone by its Chinese rivals, Walmart has recently been investing heavily in new technologies, which it has applied to its grocery business. The company recently launched its prototype "smart supermarkets" in select regions across China.
The new supermarkets feature automated checkouts that allow customers to use their smartphones along with a downloadable app to scan items as they shop. The first of these "smart supermarkets" was opened in Shenzhen last year.
