Business
Reducing reliance on China? Walmart increasingly importing more goods to the US from India
Walmart, the world’s largest retailer, with an aim to cut costs and expand its supply chain diversity, is increasingly importing goods from India, reducing reliance on China, recent data has revealed. From January to August this year, the retail giant imported a quarter of its US imports from India, a stark rise from 2% in 2018, as per Import Yeti’s bill of lading figures shared with Reuters.Simultaneously, China’s share ofWalmart’s shipments decreased from 80% in 2018 to 60% during the same period. However, China still remains the retail giant’s biggest country for importing goods.
The shifting trend highlights the impact of higher import costs from China and heightened political tensions between the US and China. Companies like Walmart are now exploring alternative sourcing countries like India, Thailand, and Vietnam.
Walmart’s Executive VP of Sourcing, Andrea Albright, emphasized the need for resilient supply chains, best prices, reducing dependency on a single supplier or location due to various factors like natural disasters and material shortages.
Walmart on its part has also said that the bill of lading data offers only a partial view of its sourcing. Itt affirmed the pursuit of more manufacturing capacity without specifically reducing reliance on any particular market. India, in particular, has become integral to Walmart’s strategy for boosting manufacturing capacity, Albright noted.
The retail giant, which accelerated its Indian presence after acquiring a majority stake in Flipkart in 2018, remains committed to importing $10 billion worth of goods annually from India by 2027. Presently, it imports around $3 billion worth of goods from India annually, maintaining its trajectory to achieve the set target.
Why India works for Walmart
Walmart is expanding its imports from India, covering a wide range of goods from toys and electronics to bicycles and pharmaceuticals, according to Albright. She mentioned that packaged food, dry grains, and pasta are also popular imports from India.
With India’s stock market surging to record levels this year, the country is perceived as better positioned than China for large-scale, low-cost manufacturing. Walmart finds India appealing due to its expanding workforce and technological advancements. Conversely, China experienced its first population decline in six decades last year.
Walmart began its sourcing operations in Bangalore in 2002 and now employs over 100,000 people, including temporary workers, across various units like Walmart Global Tech India, Flipkart Group, PhonePe, and sourcing operations.
Walmart’s CEO, Doug McMillon, met Indian Prime Minister Narendra Modi earlier this year, with Modi terming it a fruitful meeting. McMillon affirmed Walmart’s commitment to supporting India’s manufacturing growth and generating opportunities. Amazon, a competitor of Walmart, aims for merchandise exports worth $20 billion from India by 2025.
Rajesh Kharabanda, CEO of Freewill Sports, a small Indian soccer ball supplier, highlighted the positive impact on businesses like his due to this shift in sourcing.
Experts in the supply chain domain quoted by Reuters suggest that the rising shipping costs from China have contributed to Walmart’s pivot to India. According to Chris Rogers, a research analyst at S&P Global Market Intelligence, China’s increasing labor expenses compared to other manufacturing centers have made sourcing from mainland China less competitive.
The Reuters analysis also points out that China’s minimum wage varies by region, ranging from 1,420 yuan to 2,690 yuan per month ($198.52 – $376.08). On the other hand, estimates from the central bank indicate that average wages for unskilled and semi-skilled workers in India range from about 9,000 Indian rupees to 15,000 Indian rupees per month ($108.04 – $180.06).
Supply chain management
The pandemic highlighted vulnerabilities in global supply chains, revealing excessive dependence of US importers on a few markets. Albright noted the need to ensure product sourcing diversification for contingency plans. Walmart’s sourcing strategy extends to Pakistan and Bangladesh, where they’ve expanded sourcing for home and apparel goods, Albright revealed.
US import records indicate that numerous shipments from Freewill made their way to Walmart’s warehouses from Mundra Port in Gujarat, India’s largest private port. Rajesh Kharabanda emphasized a newfound confidence in India’s manufacturing and infrastructure availability, reflecting a shift in perceptions.
India’s central bank forecasts a 6.5% economic expansion this fiscal year, while China is expected to achieve approximately 5% growth.
Shekhar Gupta from Devgiri, a rug supplier to Walmart for a decade, noted a noticeable shift in Walmart’s strategy in the past year and a half, with a clear focus on positioning India at the core of their expansion plans.
The shifting trend highlights the impact of higher import costs from China and heightened political tensions between the US and China. Companies like Walmart are now exploring alternative sourcing countries like India, Thailand, and Vietnam.
Walmart’s Executive VP of Sourcing, Andrea Albright, emphasized the need for resilient supply chains, best prices, reducing dependency on a single supplier or location due to various factors like natural disasters and material shortages.
Walmart on its part has also said that the bill of lading data offers only a partial view of its sourcing. Itt affirmed the pursuit of more manufacturing capacity without specifically reducing reliance on any particular market. India, in particular, has become integral to Walmart’s strategy for boosting manufacturing capacity, Albright noted.
The retail giant, which accelerated its Indian presence after acquiring a majority stake in Flipkart in 2018, remains committed to importing $10 billion worth of goods annually from India by 2027. Presently, it imports around $3 billion worth of goods from India annually, maintaining its trajectory to achieve the set target.
Why India works for Walmart
Walmart is expanding its imports from India, covering a wide range of goods from toys and electronics to bicycles and pharmaceuticals, according to Albright. She mentioned that packaged food, dry grains, and pasta are also popular imports from India.
With India’s stock market surging to record levels this year, the country is perceived as better positioned than China for large-scale, low-cost manufacturing. Walmart finds India appealing due to its expanding workforce and technological advancements. Conversely, China experienced its first population decline in six decades last year.
Walmart began its sourcing operations in Bangalore in 2002 and now employs over 100,000 people, including temporary workers, across various units like Walmart Global Tech India, Flipkart Group, PhonePe, and sourcing operations.
Walmart’s CEO, Doug McMillon, met Indian Prime Minister Narendra Modi earlier this year, with Modi terming it a fruitful meeting. McMillon affirmed Walmart’s commitment to supporting India’s manufacturing growth and generating opportunities. Amazon, a competitor of Walmart, aims for merchandise exports worth $20 billion from India by 2025.
Rajesh Kharabanda, CEO of Freewill Sports, a small Indian soccer ball supplier, highlighted the positive impact on businesses like his due to this shift in sourcing.
Experts in the supply chain domain quoted by Reuters suggest that the rising shipping costs from China have contributed to Walmart’s pivot to India. According to Chris Rogers, a research analyst at S&P Global Market Intelligence, China’s increasing labor expenses compared to other manufacturing centers have made sourcing from mainland China less competitive.
The Reuters analysis also points out that China’s minimum wage varies by region, ranging from 1,420 yuan to 2,690 yuan per month ($198.52 – $376.08). On the other hand, estimates from the central bank indicate that average wages for unskilled and semi-skilled workers in India range from about 9,000 Indian rupees to 15,000 Indian rupees per month ($108.04 – $180.06).
Supply chain management
The pandemic highlighted vulnerabilities in global supply chains, revealing excessive dependence of US importers on a few markets. Albright noted the need to ensure product sourcing diversification for contingency plans. Walmart’s sourcing strategy extends to Pakistan and Bangladesh, where they’ve expanded sourcing for home and apparel goods, Albright revealed.
US import records indicate that numerous shipments from Freewill made their way to Walmart’s warehouses from Mundra Port in Gujarat, India’s largest private port. Rajesh Kharabanda emphasized a newfound confidence in India’s manufacturing and infrastructure availability, reflecting a shift in perceptions.
India’s central bank forecasts a 6.5% economic expansion this fiscal year, while China is expected to achieve approximately 5% growth.
Shekhar Gupta from Devgiri, a rug supplier to Walmart for a decade, noted a noticeable shift in Walmart’s strategy in the past year and a half, with a clear focus on positioning India at the core of their expansion plans.
