What Walmart and JD.com’s Latest Investment Means for Chinese Retail

The Chinese grocery-delivery firm, Dada-JD Daojia, announced Thursday that has received a $500 million injection of financing.

The money comes jointly from U.S. retail giant Walmart and Chinese e-commerce player JD.com. Walmart (WMT) said it had contributed some $320 million.

Dada-JD Daojia is a dual-entity business comprising JD Daojia, which is JD.com’s online-to-offline business, and Dada Nexus, a large crowd-sourcing delivery platform in China. Today’s business was formed following a merger in 2016.

So, how does the setup work? JD Daojia partners up with stores in hundreds of Chinese cities, offering a one-hour grocery delivery service via an app, whilst Dada coordinates the scooter-riding delivery-men side of affairs. Bloomberg quoted Dada-JD Daojia as saying it would to use its fresh $500 million for supply chain technology and to better serve its online merchants (stores).

Here’s where things get a little complex. Walmart owns part of JD.com, and appears increasingly interested in obtaining more. Within a period of seven months in 2017, Walmart upped its stake in the colossal Chinese retailer from 5.9% to 12.1%. In fact, Walmart has been making strides in integrating its retail network in China as a whole, and to get in on the game of retailers pairing up with tech giants to enhance shoppers’ online and offline experience. Alibaba is one key player in the field, and in June this year, it welcomed a strong dose of investment from Google.

Wern-Yuen Tan, president and CEO for Walmart China, told Reuters that he believed the investment and subsequent closer strategic collaboration would help Walmart deliver a better O2O (online to offline) customer experience and improve its omni-channel footprint.

Arkansas-based Walmart is increasingly gaining a reputation for striking business deals with local players in foreign markets. In Japan, it works with Rakuten, and in May this year, it announced a sizable investment in Indian e-commerce leader Flipkart.

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