‘Dragon’ will feel chilly, India will welcome another American company

Walmart employees have met with several contract manufacturers, inquiring about their capacities, processes and testing methods.

Image Credit source: TV9

Dragon means China is going to get chilly again. The reason is that after Apple and other American companies end their relationship with China, Walmart is also leaving China. Now India is trying its best to capitalize on this opportunity and is ready to welcome it. Walmart is in talks with major electronics contract manufacturers to buy IT hardware, mobile accessories, electronic products, so that it can sell in the US. Walmart has talked to manufacturers like Dixon Technologies and Optimus Electronics for this. American retail company is planning to shift sourcing to India.

Talks are going on with these companies

Walmart already has majority stake in Flipkart and PhonePe. He is looking to source a wide range of products like cables, chargers, screen protectors, tablets, laptops. According to media reports, Walmart employees have met several contract manufacturers, inquired about their capacity, process and testing methods. In response to an email, a Walmart spokesperson confirmed that Walmart’s planning to source from India is long back and well known. At the same time, no official statement has come from Indian contract manufacturers Dixon, Optimus Electronics, Jaina Group and Bhagwati Products.

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What is Walmart’s planning

With annual exports expected to reach $3 billion by 2020, India is already one of Walmart’s top sourcing markets. That year, Walmart said it plans to triple exports of its products from India to $10 billion a year by 2027. In the media report, an executive said that this would be a great opportunity for Indian manufacturers to make inroads in America, whose export potential is huge. Walmart is looking to reduce its dependence on Chinese suppliers amidst growing geo-political tension between the US and China.

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Quality will be a big challenge

On the other hand, according to another executive, the sourcing will start in several phases. Walmart contacts contract manufacturers who already make the products it sources. For example, if one of the contract manufacturers has an in-house design of a laptop made for another brand, Walmart will come to inspect whether it meets their strict quality standards. By the way, meeting the quality standard will be the biggest challenge for the contract manufacturers of India.

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Walmart’s business in China

As of January 31, 2023, Walmart has approximately 43 Sam’s Club stores and 322 Walmart Supercenters, 365 retail units, in China. Walmart said in its December quarter earnings that Sam’s Club posted net sales of $21.4 billion, compared to $19.2 billion a year earlier. The US retailer said membership income grew by 7.1 per cent. Member count is at all time high. Walmart International, which includes Flipkart, reported net sales of $27.6 billion for the quarter ending December 31, 2022, a growth of over 2 per cent year-on-year. The Indian ecommerce industry is estimated to be worth $50 billion in 2022, which is expected to reach $150-170 billion by 2027.