Wal-Mart Stores Inc. stated on Monday that it is acquiring a controlling stake of Yihaodian, a Chinese e-commerce firm, in order to find new outlets of revenue and to beat out competitors in a fast growing economy.
In May of last year, Wal-Mart announced its plan to buy a small stake in Yihaodian, but only two weeks after the company appointed Greg Foran as the head of its China operations, it is taking full control in the e-commerce company.
Yihaodian is a company that serves a growing customer base and has same-day and next-day shipping. With increasing numbers of people using the Internet for their shopping needs, Wal-Mart is seizing the opportunity to join in this growing market.
However, this new move also comes as Wal-Mart shares are dropping. Last Tuesday, the shares dropped 4 percent by midday.
Wal-Mart will most likely move forward with the strategy to increase its customer base by developing an online shopping outlet. Although this is still fairly recent news, students at UMD feel as though Wal-Mart is proceeding in the right direction.
“If Wal-Mart is serious about becoming a powerful e-commerce force in China, then these steps are what is necessary to achieve its goal,” said Jessica Bramnick, a sophomore international business major.
Arielle Pascal, a junior marketing major, also believes that this is the right move for the company. “I think Wal-Mart made a smart decision which has a lot of potential for growth,” said Pascal. “This is a new venture for them and I am excited to hear what happens.”