In an effort to diversify its supply chain and reduce costs, Walmart is importing more commodities to the US from India and importing less goods from China, according to data obtained by Reuters.
Based on bill of lading numbers given by Reuters by data provider Import Yeti, the world's largest retailer imported 25% of its U.S. goods from India between January and August of this year. In contrast, only 2% did so in 2018.
According to the same data, the percentage of exports coming from China decreased from 80% in 2018 to 60% during the same time. Indeed, China continues to rank as the top country for Walmart's imports.
Large U.S. firms are increasingly opting to import more from countries like India, Thailand, and Vietnam as a result of the increasing expense of purchasing from China and the escalating political tensions between Washington and Beijing.
"We want the best prices," said Andrea Albright, Walmart's executive vice president of sourcing,, in an interview. So, our supply chains must be resilient. Since we're always dealing with problems like raw material shortages and natural disasters, I can't put my product's fate in the hands of just one source or location.
Walmart issued a response claiming that the data from bill of lading only showed a portion of its sourcing and that increasing redundancy "does not necessarily mean" that the company was cutting back on its dependence on any one sourcing market. "We're a growth business and are working to source more manufacturing capacity," stated Walmart.
According to Albright, Walmart's efforts to increase its production capacity have focused heavily on India.
In 2018, Walmart acquired a 77% share in Flipkart, an Indian e-commerce firm. Since then, Walmart's growth in India has been accelerated. It then pledged to buy $10 billion worth of commodities from India annually by 2027, two years later. Albright stated that the target is still within reach. At present, it imports commodities from India valued at about $3 billion annually.
The Workforce and Technology: Critical Factors
Toys, gadgets, bicycles, and even medications are among the many items that Walmart imports from India to the United States, according to Albright. In addition, she mentioned that pasta, dry grains, and packaged foods are some of India's most popular imports.
Many believe that India, whose stock market has hit new heights this year, can compete with China on a massive scale for cheap manufacturing.
Albright stated that Walmart was enticed by the company's quickly expanding personnel and technology prowess. However, last year China announced its first population fall in 60 years.
Bangalore was the site of Walmart's sourcing operations from 2002 forward. With its Walmart Global Tech India division, Flipkart Group, PhonePe, and sourcing operations, the corporation has grown to employ over 100,000 individuals in the nation, including temporary labor.
In May of this year, Walmart CEO Doug McMillon met with Indian Prime Minister Narendra Modi, a meeting that Modi described as "a fruitful one."
On May 14, Modi expressed his happiness on X, the platform formerly known as Twitter, over India's growing appeal as an investment destination. The CEO of Walmart, McMillon, promised that the company would "continue to support the country's manufacturing growth and create opportunity."
A month ago, Amazon, a competitor of Walmart, announced that it aims to export $20 billion worth of items from India by the year 2025.
One such company that has profited is Freewill Sports, a tiny Indian soccer ball supplier, according to an interview with Freewill Sports' CEO Rajesh Kharabanda.
Supply chain experts attribute the shift to India in part to the increasing cost of delivering goods from China.
"Sourcing from mainland China has become less competitive because of rising labor costs versus other manufacturing centers," stated Chris Rogers, a research analyst at S&P Global Market Intelligence's Panjiva supplier chain analysis department.
The federal minimum wage in China varies from 1,420 yuan ($198.52) to 2,690 yuan ($376.08) a month, depending on the province and, in some cases, the city in question. The Indian central bank estimates that the average monthly income for unskilled and semi-skilled workers ranges from approximately 9,000 to 15,000 Indian rupees ($108.04 to $180.06).
Snags in the supply chain
U.S. importers were found to be overly dependent on a handful of markets, as the COVID-19 epidemic revealed vulnerabilities in global supply chains.
"Planning for a geopolitical event is like planning for a hurricane," Albright remarked. "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."
According to Albright, Pakistan and Bangladesh have also grown as suppliers of clothing and household goods as a result of Walmart's strategy.
U.S. import data shows that last year, the biggest private port in India, Mundra Port, in Gujarat, sent eight shipments of Freewill to Walmart warehouses.
“There is a newfound confidence in the Indian manufacturing industry and also the availability of factory infrastructure,” said Freewill’s Chief Executive Rajesh Kharabanda in an interview.
This fiscal year, the Indian central bank expects the country's GDP to grow by 6.5%. Predictions for China's GDP growth this year hover around 5%.
Devgiri, Shekhar Gupta's family firm, has been selling floor rugs to Walmart for about a decade. "In the last 12 to 18 months there has certainly been a bigger impact," he said. "That's when Walmart started putting a true strategy behind how they wanted India at the center of their growth."
Comentários