Walmart shifting from China to India over lower import costs
What's the story
Walmart, the world's largest retailer, is increasingly importing goods from India to the US, reducing its dependence on China.
From January to August this year, 25% of Walmart's US imports came from India, compared to 2% in 2018.
Meanwhile, 60% of shipments were from China during the same period, down from 80% in 2018.
This shift is due to rising costs and political tensions between America and China, prompting companies to turn to countries like India, Thailand, and Vietnam.
Details
Walmart shifts focus from China to India for imports
Andrea Albright, Walmart's Executive Vice President of Sourcing, said, "We want the best prices. That means I need resiliency in our supply chains. I can't be reliant on any one supplier or geography for my product."
India has become essential for Walmart's manufacturing capacity expansion.
Since acquiring a 77% stake in local e-commerce firm Flipkart in 2018, Walmart is accelerating growth in India and aims to import $10 billion worth of goods annually by 2027.
What Next?
Reasons behind the shift
India's growing workforce and technological advancements make it an attractive destination for low-cost, large-scale manufacturing.
In comparison, China reported its first population decline in 60 years last year.
Walmart began its sourcing operations in Bengaluru in 2002 and now employs over 100,000 people in India across Walmart Global Tech India, Flipkart Group, PhonePe, and sourcing operations.
Insights
Rising shipping costs drive change
Indian suppliers like Freewill Sports, a small football supplier, have benefited from this shift.
The increasing cost of shipping products from China has also contributed to the switch to India.
Rajesh Kharabanda, Freewill's Chief Executive said, "There is a newfound confidence in the Indian manufacturing industry and also the availability of factory infrastructure."
Walmart's strategy has also led to growth for Pakistan and Bangladesh as suppliers of home and apparel products.