In a strategic move, Walmart is increasingly sourcing goods from India, reducing its reliance on China to cut costs and diversify its global supply chain, as revealed by data seen by Reuters. The world's largest retailer shipped 25% of its U.S. imports from India between January and August this year, a significant surge from the 2% reported in 2018.
During the same period, China's contribution to Walmart's shipments decreased to 60%, down from 80% in 2018. Despite this shift, China remains Walmart's primary country for importing goods.
This change underscores the impact of rising costs associated with importing from China and heightened political tensions between the U.S. and China. Large U.S. companies, including Walmart, are exploring alternatives in countries such as India, Thailand, and Vietnam.
Walmart's Executive Vice President of Sourcing, Andrea Albright, emphasized the importance of supply chain resilience. "We can't be reliant on any one supplier or geography for my product," Albright stated. Walmart aims for flexibility in managing challenges, from natural disasters to raw material shortages.
India plays a pivotal role in Walmart's strategy to build manufacturing capacity. Since acquiring a 77% stake in Indian e-commerce firm Flipkart in 2018, Walmart has committed to importing $10 billion of goods from India annually by 2027. Currently, the company imports around $3 billion worth of goods from India each year.
Walmart's imports from India include a diverse range of products, from toys and electronics to bicycles and pharmaceuticals. India's growing workforce and technological advancements make it an attractive manufacturing hub compared to China, which reported its first population decline in six decades last year.
The rising cost of shipping from China has also contributed to the shift, with sourcing experts highlighting increased competitiveness from other manufacturing centers due to rising labor costs in China.
Walmart's strategy aligns with a broader trend among U.S. importers, revealing vulnerabilities in global supply chains exposed by the COVID-19 pandemic. The move to diversify sources reduces risk and strengthens resilience.
While Walmart remains committed to supporting India's manufacturing growth, its shift also benefits other countries like Pakistan and Bangladesh, which have expanded as suppliers of home and apparel products.
This strategic shift reflects Walmart's commitment to ensuring a robust and adaptable supply chain, responding to geopolitical events and global economic dynamics.
News Source: Reuters.com
