Wal-Mart partners with China’s No. 2 e-commerce site

Wal-Mart operated 432 brick-and-mortar stores in China at the end of its last fiscal year in January 2016.

Inc (NASDAQ:JD) shares are up as the company has reached a deal in China with Wal-Mart Stores Inc (NYSE:WMT).

Wal-Mart will continue to operate the Yihaodian direct sales business, and it will still sell on the Yihaodian marketplace, while working with JD.com to expand the Yihaodian brand and business, the companies said in their press release. Alibaba stock was near 78.50, up 2%, early Monday afternoon.

NEW YORK (AP) – Wal-Mart is selling its Chinese online business to the country’s No. 2 e-commerce site in a strategic partnership that it hopes will bolster its presence in the extraordinarily lucrative but increasingly competitive online marketplace.

Wal-Mart Stores Inc. stands to gain a tremendous amount of traffic from JD.com’s huge customer base and its same-day delivery network. Wal-Mart will take a 5 percent stake in JD.com, or almost 145 million newly issued Class A shares in the company.

Though JD.com’s strength is in brand-name electronics, it will be able to help capitalize on Yihaodian’s strong brand name and business in eastern and southern China and in important categories such as groceries and household goods.

Wal-Mart shares traded up about 1.1% shortly after Monday’s opening bell to $71.77, in a 52-week range of $56.30 to $74.14. Still, its market share in sales of products online to consumers is about 23%, compared with TMall’s 58%, according to data from consulting firm iResearch.

Yihaodian’s niche has been grocery sales, but competition in the groceries has heated up in the past year, as local Chinese retailers have gone online and many startups have entered the field to sell everything including imported avocados and dishwashing detergent.

JD.com has bolstered its food offerings, for example, through its investment in FruitDay, a Chinese online produce retailer, and is expanding imports, including signing deals with Australian milk companies and US meat and vegetable producers.

Wal-Mart’s entry into China’s e-commerce market began when it bought a 51% stake in Yihaodian in 2012.