Walmart announced plans to invest $1.2 billion in its Chinese distribution centers over the next 20 years to make it more competitive especially in the red-hot grocery delivery sector, according to CNN Business.
“Walmart continues to increase investment in supply-chain logistics in order to provide our Chinese customers with great fresh products and improve our service,” said Ryan McDaniel, SVP of supply chain for Walmart China in a statement to CNN Business.
Walmart has already invested $102 million in building DCs for perishable items in the south of China to cater to online shoppers. It faces stiff competition from local supermarkets and ecommerce companies like Alibaba.
Walmart partnered with Chinese tech firm JD.com in 2016 when it sold it its Yihaodian ecommerce marketplace and set up a presence on the marketplace. It has also invested more than $300 million in Chinese delivery firm Dada-JD Daojia.
Reuters reported that Walmart’s new investment followed a meeting between President Donald Trump and Chinese counterpart Xi Jinping over the weekend in Osaka, Japan with hopes for a U.S.-China trade deal.
Walmart has been pushing to integrate its network in China as the country continues to grow its “smart retail” movement. This is where retailers and tech companies like Alibaba, JD.com and Tencent cut deals to combine online and physical retail, according to Reuters.