February 20, 2012 / 4:02 AM / 6 years ago

Wal-Mart increases stake in Chinese e-commerce firm

A worker positions a sign inside a new Walmart Express store in Chicago July 26, 2011.John Gress/Files

SHANGHAI (Reuters) - Wal-Mart Stores Inc (WMT.N) said on Monday it has reached an agreement to raise its stake in a Chinese e-commerce firm, Yihaodian, to around 51 percent as the world's largest retailer aims to boost its presence in China's fast growing consumer market.

Walmart announced in May last year it planned to buy a minority stake in Yihaodian, a Chinese website selling consumer items and groceries.

Walmart said in a news release that the fresh investment into Yihaodian will take its stake to around 51 percent and will be subject to government regulatory approval. Walmart did not provide any financial details to the deal.

"Our further investment in Yihaodian demonstrates that we are committed to investing in China in a key growth industry and developing all that goes with it: logistics, infrastructure, innovative talent and new technologies...," Neil Ashe, President and CEO of Walmart Global eCommerce, said in the statement.

Yihaodian, with 5,400 staff, operates a logistics network based in Shanghai, Beijing, Guangzhou, Wuhan and Chengdu. It serves a growing customer base with same-day and next-day delivery of essential daily items at competitive prices.

The announcement came weeks after Wal-Mart named an industry veteran, but a relative newcomer to China, to run what is a strategically crucial business for the company as it faces tougher competition and after a series of leadership changes at its China unit, which has been tainted by food scandals, including a pork mislabelling issue last year that forced it to temporarily shut a dozen stores in central China.

Walmart China has faced intense competition on the mainland, where it competes against China's Sun Art (6808.HK) and China Resources Enterprise (0291.HK), with local brands such as Yonghui and Shinshiji. It is also up against French hypermarket chain Carrefour (CARR.PA), Britain's Tesco (TSCO.L) and Germany's Metro AG MEOG.DE, which are expanding to inland China as interior cities become more affluent.

When Wal-Mart reports fiscal fourth-quarter results on February 21, analysts on average expect to see the company's best U.S. sales performance in more than two years.

Reporting by Melanie Lee, Additional reporting by Donny Kwok; Editing by Jacqueline Wong

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