Google will invest $550 million in Chinese e-commerce powerhouse JD.com, part of the U.S. internet giant’s efforts to expand its presence in fast-growing Asian markets and battle rivals including Amazon.com. This is as per a report in Reuters.
JD.com, Inc., also known as Jingdong and formerly called 360buy, is a Chinese e-commerce company headquartered in Beijing. It is one of the two largest B2C online retailers in China by transaction volume and revenue, a member of the Fortune Global 500 and a major competitor to Alibaba-run Tmall. As of the first quarter of 2018, the platform has 301.8 million active users.It was founded in June 1998, by Richard Liu as JD Multimedia. When the SARS outbreak affected the country, Richard saw an opportunity amid the difficulty to harness the potential of the Internet to support his business and began selling products online. In 2004, Richard closed his brick-and-mortar store and moved his business online.
The two companies described the investment as one piece of a broader partership that will include the promotion of JD.com products on Google’s shopping service. This could help JD.com expand beyond its base in China and Southeast Asia and establish a meaningful presence in U.S. and European markets.
Company officials said the agreement initially would not involve any major new Google initiatives in China, where the company’s main services are blocked over its refusal to censor search results in line with local laws.
JD.com’s investors include Chinese social media powerhouse Tencent Holdings Ltd, the arch-rival of Chinese e-commerce leader Alibaba Group Holding Ltd, and Walmart Inc. It also has a partnership with French retail giant Carrefour SA.
Google is stepping up its investments across Asia, where a rapidly growing middle class and a lack of infrastucture in retail, finance and other areas have made it a battleground for U.S. and Chinese internet giants. Google recently took a stake in Indonesian ride-hailing firm Go-Jek. On May 9 of this year, Walmart had announced that it had bought roughly 70% in Flipkart. The deal also said that Alphabet, parent of Google will be buying 5% stake in the same company. So far, there has not been any news whether it has happened or not.
Google will get 27.1 million newly issued JD.com Class A ordinary shares as part of the deal. This will give them less than a 1 percent stake in JD, a spokesman for JD said.
For JD.com, the Google deal shows its determination to build a set of global alliances as it seeks to counter Alibaba, which has been more focused on forging domestic retail tie-ups. Japan’s Softbank Group Corp, which is making big internet investments around the globe, is a major investor in Alibaba.
“This partnership with Google opens up a broad range of possibilities to offer a superior retail experience to consumers throughout the world,” said Jianwen Liao, JD.com’s chief strategy officer, in a statement.
Company officials said the deal would marry Google’s market reach and strength in analytics with JD.com’s expertise in logistics and inventory management.