Walmart reduces import dependence on China and shifts focus to India

Walmart, the world's largest retailer, has significantly increased its imports from India while decreasing its reliance on China. This strategic decision was taken to cut costs and diversify its supply chain.

Bill of lading figures shared by data firm Import Yeti reveal that Walmart shipped a quarter of its U.S. imports from India between January 2023 and August 2023, a stark contrast to the 2% reported in 2018. During the same period, only 60% of the retailer's shipments came from China, down from 80% in 2018. Despite this shift, China remains Walmart's primary country for importing goods.

The move reflects the growing costs of importing from China and escalating political tensions between the United States and Beijing.

Andrea Albright, Walmart's executive vice president of sourcing, emphasized the need for supply chain resilience in the face of challenges ranging from natural disasters to raw material shortages. Albright stated Walmart’s aim is to get the best prices, highlighting the necessity of diversifying sources to mitigate risks.

Walmart clarified in a statement that the bill of lading data provides a partial picture and does not necessarily indicate a reduction in reliance on any specific sourcing market. The company emphasized its commitment to sourcing more manufacturing capacity as part of its growth strategy.

India has become a crucial component of Walmart's manufacturing plans since 2018, when it acquired a 77% stake in Indian e-commerce firm Flipkart. Walmart aims to import $10 billion worth of goods from India annually by 2027, with current imports standing at approximately $3 billion per year.

Walmart is diversifying its imports from India, including products such as toys, electronics, bicycles, pharmaceuticals, packaged food, dry grains, and pasta. India's rapidly growing workforce and technological advancements make it an attractive alternative to China for large-scale manufacturing.

Walmart's sourcing operations in Bangalore, which began in 2002, have expanded significantly, employing over 1,00,000 people across various offices, including its Walmart Global Tech India unit, Flipkart Group, PhonePe, and sourcing operations.

The rising cost of shipping goods from China and the increasing competitiveness of India's manufacturing sector have played a role in Walmart's shift. Supply chain experts point to rising labor costs in China as a contributing factor, making other manufacturing centers more appealing.

The COVID-19 pandemic exposed vulnerabilities in global supply chains, prompting U.S. importers to reduce dependence on a small number of markets. Walmart's strategy has also benefited suppliers in Pakistan and Bangladesh, particularly in the home and apparel product categories.

As Walmart continues to navigate supply chain challenges, the retailer remains focused on strategic partnerships and diversifying its sourcing to ensure resilience in the face of geopolitical and economic uncertainties.