‘No way’: Walmart loses $7.5M in China sales in December 2017
The company announced in November that it was selling its online store in China to a group led by a Hong Kong businessman with ties to the Chinese Communist Party.
The deal was a big loss for Walmart, which had planned to sell more than 2 million square feet of space in China.
But as the company’s stock fell, sales in China rose, and in January the company reported a bigger profit than analysts expected.
The company had expected to post a loss of about $10 million for the year, according to an investor presentation.
The Chinese business environment is not favorable for companies like Walmart, where there is an entrenched tradition of selling goods directly to customers, and a strict labor market.
The loss was partly attributed to Walmart’s new policy of selling direct to consumers.
But a recent study from the consulting firm Bain Capital estimates that the new policy reduced the cost of goods and services to consumers by as much as $2.2 billion in 2018.
This may have been the reason why Walmart was able to make the sale to the Hong Kong group.
The Hong Kong buyer, Zeng Jianyu, has ties to China’s government and is a well-known political figure in Hong Kong.
He was recently named as the next vice president of the People’s Bank of China, a powerful economic body.
The group of buyers included China’s largest online retailer, Alibaba Group, and private equity firm Tiger Global, according a Reuters story.
Alibaba was also a member of the group, and Tiger was reportedly looking for a buyer for its retail business.
In December, Walmart reported its biggest quarterly profit in four years, beating analysts expectations.
In 2017, the company lost $3.2 million, down from $4.5 million in 2016.
The stock was down as much to as more than $65 in early trading Thursday.