What is Driving Walmart’s Shift From China Towards India for Imports?
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What is Driving Walmart’s Shift From China Towards India for Imports?

In a bid to shift its reliance from the Chinese supply chains, multinational retail corporation Walmart is shifting its focus towards India. As per the data seen by news agency Reuters, the retailer imported one-quarter of its US imports from India between January and August 2023. The figures look stark when compared with 2018 when India constituted just 2% of the US imports by Walmart.

The report highlights how the cost factors and growing geopolitical tensions are encouraging Walmart to shift its supply chains from China to India, Thailand, and Vietnam. China is Walmart’s biggest importer, but the numbers from the country dramatically dropped to just 60% in 2023 from over 80% during the year 2018.

What is driving the shift from China to India?

“I need resiliency in our supply chains. I can’t be reliant on any one supplier or geography for my product because we’re constantly managing things from hurricanes and earthquakes to shortages in raw materials,” Andrea Albright, Walmart’s executive vice president of sourcing said in an interview while emphasizing the value of best prices.

Walmart’s disillusionment from China goes parallelly with its rising interest in Indian markets. Walmart has been intensifying its expansion efforts in India since 2018, marked by its acquisition of a 77% stake in the Indian e-commerce company Flipkart. Subsequently, in 2020, Walmart pledged to import goods totaling $10 billion annually from India by 2027.

As of now, the company is successfully progressing towards this objective and presently imports approximately $3 billion worth of goods from India on an annual basis, as affirmed by Albright.

India’s optimistic economic indicators and a growing stock market are making it an attractive alternative to China especially in the low-cost, large-scale manufacturing models. Currently, the retail giant is sourcing products ranging from toys and electronics to bicycles and pharmaceuticals from India.

The leadership of Walmart is also increasing its engagement with the Indian government as its CEO Doug McMillon met Prime Minister Narendra Modi in May this year where the two leaders discussed the investment scenarios in the country.

Source : Mint