China Resources to offload stake in Wal-Mart China for $525mn

China Resources SZITIC Trust Co Ltd, a unit of China Resources Corp, is planning to divest minority stake in Wal-Mart Stores Inc. The state-backed China Resources Trust has a minority stake in the US retailer's operations in China. Wal-Mart Stores Inc has 21 Wal-Mart outlets in China. China Resources has listed its stake for sale at Yuan3.3billion ($525million). It's estimated that China Resources has 35 percent stake in the Wal-Mart outlets in China. Wal-Mart believes the transfer of minority stake doesn't impact the operations in China. 

The US-based Wal-Mart is the world's largest retailer. The stake sale in Wal-Mart comes at a time when China's economy is slowing down while increased competition from Chinese online rivals impacting the sales volume. Brick and mortar retailers are also largely feeling the heat of cut-throat competition in the Chinese market. 

The reasons for offloading stake were not known. China Resources also didn't provide any details on this. Along with Wal-Mart, other global retailers such as France-based Carrefour SA and UK-based Tesco Plc are suffering from sales drop for the past few years in the Chinese market.

All these global majors in the retailing segment are fast losing market share to the local competitors in the Chinese market. Wal-Mart's spokesperson for China said the retailer respects its partner's investment decision and further said that the stake sale plan shouldn't impact the ongoing business in the Chinese market. 

Wal-Mart has stores from China's western Sichuan province to Beijing. Wal-Mart is focusing on online presence while reducing dependence on physical stores. China Resources Trust Co has offered its stake for Yuan3.3bn ($525mn) according to official communiqué to Shanghai United Assets and Equity Exchange.

The profits of the world's largest retailers for the quarter ended July was lower than the forecast. From August onwards, the cost burden increased significantly for the global retailing major as it raised wages. 

Wal-Mart in April announced its expansion plan for Chinese market. It was planning to open 115 new stores in China over next two years. Wal-Mart has charted out an expansion plan to increase the number of stores by three-fold by 2017. 

Wal-Mart has been facing tough time globally as cost pressure is increasing significantly. It was forced to raise wages for half-a-million workers. Wal-Mart believes the transfer of minority stake doesn't impact the operations in China and further development plans for the dragon country. The strengthening of US dollar is impacting the financial performance of Wal-Mart. The pay rise coupled with the increase in employees' hours is also keeping a pressure on the global retailer. The investments made by Wal-Mart are expected to give results in the long run.