Walmart, the world’s largest retailer, is significantly increasing its imports from India while reducing reliance on China, according to data obtained by Reuters. Between January and August of this year, Walmart shipped 25% of its U.S. imports from India, compared to just 2% in 2018. Concurrently, the retailer’s shipments from China dropped to 60%, down from 80% in 2018. This strategic shift aims to cut costs, enhance supply chain resilience, and navigate political tensions between the U.S. and China.
Andrea Albright, Walmart’s Executive Vice President of Sourcing, emphasized the importance of diversifying supply chains for resilience against various challenges. “I can’t be reliant on any one supplier or geography for my product because we’re constantly managing things from hurricanes and earthquakes to shortages in raw materials,” Albright stated.
While acknowledging the partial nature of the bill of lading data, Walmart insisted that creating redundancy in its supply chains “does not necessarily mean” reducing reliance on any specific sourcing market. The company affirmed its commitment to sourcing more manufacturing capacity, citing India as a key component of these efforts.
Walmart’s accelerated growth in India began in 2018 with its acquisition of a 77% stake in the Indian e-commerce firm Flipkart. The retailer committed to importing $10 billion worth of goods from India annually by 2027, a target it is on track to achieve, currently importing around $3 billion annually. Goods imported from India include toys, electronics, bicycles, pharmaceuticals, packaged food, dry grains, and pasta.
India’s appeal to Walmart lies in its growing workforce and technological advancements. Walmart CEO Doug McMillon’s meeting with Indian Prime Minister Narendra Modi in May reaffirmed the company’s commitment to supporting India’s manufacturing growth.
The meeting with Mr. Doug McMillon, CEO of @Walmart, was a fruitful one. We had insightful discussions on different subjects. Happy to see India emerge as an attractive destination for investment. https://t.co/o6YgFfgbF5
— Narendra Modi (@narendramodi) May 14, 2023
The shift in Walmart’s sourcing strategy reflects a broader trend among large U.S. companies to reduce reliance on Chinese imports. Rising costs, geopolitical tensions, and the vulnerabilities exposed by the COVID-19 pandemic have prompted companies to explore alternative manufacturing centers, with India, Thailand, and Vietnam emerging as attractive options.
Thank you Prime Minister @narendramodi for a great conversation. We are working toward exporting $10B per year from India by 2027 and are committed to strengthening logistics, skill development & supply chains to make India a global export leader in toys, seafood & other goods. pic.twitter.com/y5Fx2PBf2l
— Walmart Inc. (@WalmartInc) May 11, 2023
Walmart’s sourcing operations in India, which began in 2002, have expanded significantly. The company employs over 100,000 people in the country, covering various offices under its Walmart Global Tech India unit, Flipkart Group, PhonePe, and sourcing operations.
While China remains Walmart’s largest country for importing goods, the diversification strategy is expected to continue, benefiting not only India but also other countries like Pakistan and Bangladesh. Walmart’s move reflects a broader effort to enhance supply chain resilience and navigate the complexities of global trade dynamics.
