There are few retailers that can boast the same range of products as Walmart. Where else can you buy groceries, home goods, electronics, and clothing, all in the same store? In some locations, auto parts or firearms are also available. It’s a one-stop shop, a veritable goldmine for everything a consumer could want … which is also what makes Walmart so seemingly well suited for global e-commerce.

And yet, Walmart’s entry into foreign markets has not been particularly successful. In 2016, Walmart sold its Chinese online market, Yihaodian, to JD.com, the largest retailer in China. The partnership allowed JD.com to integrate Sam’s Club China into its overall corporate structure. In return, Walmart acquired a 5 percent stake in the existing e-commerce company and enjoyed access to JD.com’s more established distribution and fulfillment channels within China.

Despite the benefits it attained through this collaboration though, Walmart recently announced its decision to divest from JD.com, as well as its renewed focus on developing its own core operations in China. The divestiture will allow Walmart to expand and develop its Sam’s Club operations independently, as well as direct critical capital to areas that offer greater growth potential.

Even if Walmart’s choice to sell its shares was somewhat unexpected, it was not altogether shocking, according to experts. Aligning the interests of global corporations in rapidly changing economies is always difficult, and recent economic trends in China have made this effort especially challenging. In particular, JD.com dominated the Chinese e-commerce space almost exclusively for many years, but new competitors, like Pinduoduo, as well as social media–integrated commerce platforms, such as Xiaohongshu and Douyin, have rapidly challenged that dominance. On the flip side, JD.com’s massive size makes rapid adaptation to changing economic conditions difficult, especially if it also hopes to ensure the growth of its subsidiaries, including Walmart. In this sense, Walmart’s decision to divest appears to signal a general lack of confidence in JD.com’s ability and motivation to ensure the best interests of Walmart or Sam’s Club in the long-term.

The dynamic partnership and resulting alliances help underscore the inherent challenges that global partnerships face. They also highlights the importance of risk mitigation strategies for partners. Companies entering foreign markets need to find ways to diversify their investments, while also focusing on their core strengths. Other companies might do well to follow Walmart’s lead and undertake a careful evaluation of whether their international partners can manage rapid fluctuations in global markets, especially in regions with quickly changing economic conditions.

Discussion Questions

1. Which companies should reevaluate their strategic partnerships in global markets?
2.  How can a company better manage its strategy in a country with a rapidly changing economy? What about in a country with a fairly stable economy? Are the risk mitigation strategies for both types of markets the same?

Sources: Daisuke Wakabayashi and Claire Fu, “Walmart Dumps Entire Stake in China’s JD.com,” The New York Times, August 21, 2024; Laura Dobberstein, “Walmart Clears Out Its Shares of Chinese E-Tailer JD.com,” The Register, August 22, 2024; Nickie Louise, “Walmart Sells Stake in JD.com to Focus on Its Own China Operations,” Tech Startups, August 22, 2024; OpenAI ChatGPT, “Assistance with Research on Walmart’s Divestiture from JD.com and Its Implications,” ChatGPT, August 25, 2024.