China's second largest e-commerce platform JD.com partnered with global retail giant Wal-Mart with the latter trading its China online unit for JD.com's stakes, a strategic step expected to expand Wal-Mart's reach to more Chinese customers.
Under the deal, JD will take ownership from Wal-Mart Stores of the Yihaodian brand, website and app while giving about a 5 percent equity stake to Wal-Mart, worth about 1.5 billion U.S.dollars at JD's current valuation, the company announced Monday night.
The deal is expected to give Wal-Mart access to JD's online traffic and bolster its presence in the extraordinarily lucrative, but increasingly competitive, online marketplace.
Wal-Mart Sam Club China will open a flagship section on JD.com, and both companies will leverage their supply chains and broaden the range of imported goods to meet the growing demands from increasingly affluent and quality-oriented Chinese consumers.
In a statement issued Monday, Wal-Mart CEO Doug McMillon said JD had "complementary business and was an ideal partner."
Yihaodian has a strong presence in eastern and southern China, selling food and beverages, home goods and electronics.
JD chief executive Richard Liu expects the alliance to help improve the customer experience and boost business for Yihaodian thanks to JD's logistics capabilities and wide range of products.
JD has nearly 6,000 delivery and pickup stations in about 2,500 counties and districts across China, with a huge customer base and an outstanding same-day delivery network.
The company launched a 20-day long online shopping promotion campaign starting from June 1 to June 20, which received orders worth over 100 million yuan, about 85 percent of transactions were on mobile devices.
The NASDAQ-listed Chinese online retailer saw its shares surge nearly 8 percent before trading was halted Monday.
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