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Walmart Shifts to India, Cuts China Imports
Walmart, the world’s largest store, is importing more goods to the United States from India and reducing its dependence on China.
Between January and August this year, Walmart shipped 25 percent of its U.S. imports from India. That compares to just 2 percent in 2018. Import Yeti, a data company, shared the information with Reuters.
The same data shows that only 60 percent of Walmart’s imports came from China during the same period, down from 80 percent in 2018. China is still Walmart’s biggest country for importing goods.
The shift shows how the rising cost of importing from China and increased tension between China and the U.S. are leading American companies to import from other countries. Those countries include India, Thailand, and Vietnam.
Andrea Alright is Walmart’s ｅxecutive vice president of sourcing. She said, “We want the best prices.” She added that Walmart has to deal with natural disasters to shortages in materials and cannot be dependent on any one supplier or area for products.
Walmart said the import information did not mean that it was reducing dependence on any of its markets. "We're a growth business and are working to source more manufacturing capacity," the company said in a statement. And Albright added that India has become an important part of Walmart’s efforts to build that manufacturing capacity.
Walmart has been increasing growth in India since 2018. It bought 77 percent of shares in the online company Flipkart. Two years later, it promised to import $10 billion worth of goods from India each year by 2027. That is a target it is on the way to meet, Albright said. It is currently importing around $3 billion worth of goods from India each year.
FILE - A Walmart store is seen in Encinitas, California on April 13, 2016. (REUTERS/Mike Blake/File Photo//File Photo)
India’s workforce and technology
Walmart is importing goods including toys, electronics, sporting equipment, and medications from India. Foods like packaged food, dry grains, and pasta are also popular imports from India, Albright told Reuters.
India, whose stock market has risen to record highs this year, is viewed as the country best equipped to outperform China in low-cost and large amounts of manufacturing.
The South Asian country also has a growing workforce and increasing technological developments. China, however, recently reported its first population decrease in sixty years.
Walmart started its sourcing operations in the Indian city of Bangalore in 2002. Now, the company employs more than 100,000 people, including temporary workers, around the country.
Rising costs from China
The rising cost of shopping goods from China has also added to the shift to India, supply chain experts say.
Chris Rogers is a researcher at S&P Global Market Intelligence’s supply chain research group Panjiva. He said, “Sourcing from mainland China has become less competitive because of rising labor costs versus other manufacturing centers.”
China's minimum wage ranges between $198.52 to $376.08 monthly. Meanwhile, average wages for unskilled and semi-skilled workers in India are between $108.04 and $180.06.
The COVID-19 pandemic showed weaknesses in worldwide supply chains, showing U.S. importers were over-dependent on a small number of markets.
Albright said planning for an event like the pandemic is like planning for a natural disaster. She said, “What I can control is where my product is coming from and how do I make sure that Christmas still happens if something happens in our supply chain.”
Words in This Story
supply chain – n. a network of businesses that supply the materials and parts needed to provide people with products and goods
shift – v. to move or to cause (something or someone) to move to a different place or position
source – v. to get something from a particular place
capacity – n. the amount of something that can be produced or managed by a factory or company
draw – n. someone or something that causes a lot of people to come to a place
versus – prep. used to indicate two different things or choices that are being compared or considered
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