Founders of Chinese E-Commerce firm Yihaodian, Liu Junling and Yu Gang, as well as, Ping An Insurance Group exited the company to launch a new venture. Wal-Mart Stores, Inc. (NYSE:WMT) was a major shareholder acquired the remaining 49% from the founders. As a result, the company has become a fully-owned one for the American firm. However, the size of the holding held by each investor was not disclosed.
CEO Named
Wal-Mart Stores, Inc. (NYSE:WMT) also named Wang Lu to head Yihaodian. He was also the President and CEO of its Global e-Commerce in Asia. For the smooth transition, Yu would act as Chairman emeritus while Liu would function as a strategic executive advisor. Earlier, in 2012, the American retailer purchased 51% stake to tap the booming e-commerce market in the world’s second-biggest economy.
In 2008, Yihaodian was established to sell online products that ranged between fresh vegetables and iPhones or imported infant formula. The company was ranked fifth in Chinese retail market with a share of only 2%. That is far below the leader Alibaba Group Holding Ltd (NYSE:BABA), which was enjoying 44% share, while JD.Com Inc (ADR) (NASDAQ:JD) was placed second with a share of 14%. The data was based on Euro monitor’s International study.
Struggled To Adapt
It appears that Wal-Mart Stores, Inc. (NYSE:WMT) has failed to cope up with the local culture, as well as, the buying trend in China. On top of it, competition from the existing retailers and a host of food scandals has deeply hurt its efforts to lift its market share in the region. Last year, the retailer was forced to shut down some of its unviable units. However, the company has committed to spend $60 million to launch 115 stores, as well as, renovate the existing locations in the current year.
With the fully holding company, it remains to be seen as to how Wal-Mart Stores, Inc. (NYSE:WMT) would shape up its retail segment in China. It seems that some local culture must be thrust upon the stores to make it an attractive place to shop.
