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Wal-Mart gives Yihaodian to JD for 5% stake


06-22-2016 04:58 BJT

To some latest news in the retailing industry. World retail leader Wal-Mart has teamed up with Chinese e-commerce platform JD.com.

Under the deal, JD will take ownership from Wal-Mart Stores of the Yihaodian brand, website and app. Wal-Mart in turn will gain about 5 percent new shares in JD.com, worth about 1.5 billion US dollars at current value. Yihaodian has a strong presence in eastern and southern China.

A Wal-Mart factsheet says the brand had more than 100 million registered customers in July 2015. The deal is expected to benefit Wal-Mart by offering it exposure to parts of China where Yihaodian is less well-known.

Meanwhile JD.com will benefit from Wal-Mart's global distribution chain by being able to offer more imported goods. JD is China's second largest e-commerce retailer after Alibaba. With its own logistics system, the company won customers among the growing number of affluent Chinese families through its services such as fast delivery.

But its shares had plunged in recent months due to worries over its ability to make profits. After this new deal, JD's shares surged over 4.6 percent. The online grocery business is growing rapidly in China. According to data from food research body IGD, the market is set to boom to nearly 180 billion dollars by 2020 from 41 billion dollars last year.

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