Walmart, the world's largest retailer, is selling off its Chinese venture, Yihaodian, to Chinese rival JD.com in exchange for a stake in the e-commerce giant.
JD.com, based in Beijing, is China's second largest e-commerce company, making around $28 billion profit in 2015. The deal, worth some $1.5 billion, will see Walmart taking a 5 percent stake in JD.com in exchange for Yihaodian, China's largest online retailer specialising in groceries.
The move by Walmart comes as western companies, such as, are getting more aggressive about making in-roads into China, the world's largest economy. E-commerce in particular is big business in the country -- industry leader Alibaba clocked in just one day last November.
Yihaodian was launched in 2008 by former Dell China executives in the midst of a tech boom in the People's Republic that saw the rise of companies like Alibaba, Baidu and TenCent. Walmart first invested in Yihaodian in 2012 before buying the company outright in 2015.
The decision to sell Yihaodian was purely strategic, according to a statement from Walmart. It gives Walmart a powerful new ally with which to crack the increasingly competitive Chinese market and opens the way for Walmart goods to be sold via JD.com's online channels.
"We're excited about teaming up with such a strong leader in JD.com, and the potential that this new relationship creates for customers in China, as well as for our businesses," said Doug McMillon, president and CEO of Walmart.