TCEHY Tencent Holdings Ltd (PK)

By Maria Armental and Juro Osawa 

Wal-Mart Stores Inc. has nearly doubled its investment in China's second-largest online retailer, a move that would give it observer status at JD.com Inc.'s board meetings, a person familiar with the matter had told The Wall Street Journal.

The Arkansas-based retailer, which like other foreign companies has struggled to crack the Chinese market, had opened a roughly 5.9% stake in the Chinese online retailer in June as part of a deal under which it sold its Chinese e-commerce business to JD.com.

Under the terms of that deal, a person familiar with the matter told the Journal, the U.S.-based retail giant could increase its stake, gaining observer status. The only JD.com strategic partner that currently has a board seat is Chinese internet company Tencent Holdings Ltd.

On Wednesday, Wal-Mart disclosed in a regulatory filing that it had increased its stake to about 10.8%, highlighting the importance of its alliance with JD.com in its long-term strategy in China.

While online shopping continues to expand in China, which has surpassed the U.S. as the world's largest e-commerce market, the Chinese market is still dominated by domestic competitors such as JD.com and Alibaba Group Holding Ltd., the largest e-commerce company.

Last year, China's online retail spending reached $589 billion, compared with $334 billion in the U.S., according to Forrester Research, a Cambridge, Mass., market-research firm.

Wal-Mart's shares, up 17% this year, closed down Wednesday at $71.67, but regained the 8 cents in after-hours trading. Meanwhile, JD's American depositary receipts, down 13% this year, rose 5.8% in after-hours trading to $29.55.

Write to Maria Armental at maria.armental@wsj.com and Juro Osawa at juro.osawa@wsj.com

(END) Dow Jones Newswires

October 05, 2016 20:20 ET (00:20 GMT)

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