Walmart commits $1.2 billion for logistics upgrade in China

Walmart announced this week plans to invest $1.2 billion for an upgrade of its logistics operations in China, one of four markets the retail giant as tagged as a priority outside the U.S.

Ryan McDaniel, senior vice president of supply chain for Walmart China, said plans are to rebuild or upgrade more than 10 distribution centers.

“Walmart continues to increase its long-term investment in the logistics supply chain in China to drive omnichannel business development, in order to better meet Chinese customers’ fresh goods and convenient services,” McDaniel wrote in a blog post. “Demand, we continue to improve the capacity of the supply chain, in the next 10 to 20 years,” McDaniel said in a statement.

Part of the investment will be to update and expand Walmart’s cold supply chain across parts of China. Funds will also support ongoing work in food safety and quality. Walmart has set up quality inspection and inspection personnel at the distribution center to conduct quality and compliance inspection on product quality. At the same time, quality testing laboratories have been set up in the fresh-keeping distribution center to conduct rapid inspections on food legal compliance, agricultural pesticide residues, sensory quality and other issues, and the test results data is shared to all stores nationwide.

Walmart said its supply chain team is constantly innovating in response to changes in logistics service demand in China’s diversified business development process. Examples are the zero-sorting solution designed for flexible distribution required by community stores, helping the business side streamline processes and reduce inventory during trial operations, saving about 50% of space and improving efficiency by nearly 300%.

Walmart China corporate spokeswoman Molly Maj said Walmart built a fresh distribution center which opened in March. The cost of the facility was $101.8 million, the largest single investment in China by Walmart since it entered the country 23 years ago. The facility serves more than 100 stores and has a maximum capacity of 165,000 boxes. She said the new fresh distribution center is the first facility in China to reach the BRC global standard.

Walmart operates a number of formats in China, including hypermarkets, Sam’s Club and Walmart supermarkets, with 400 retail units covering more than 180 cities nationwide. As Walmart continues its expansion, French competitor Carrefour just announced plans to sell 80% of its operations in China to Suning, a specialty electronics retailer in China.