Chinese eCommerce Giant JD.com gets an investment of $550 million from Google
Google, on its strategic path to expand in Asia, infuses $550 million into the well-known Chinese eCommerce giant JD.com to tap the potential of fast growing Asian markets. This investment is a part of a broader partnership that will enable JD sell its products through Google’s shopping services.
While this partnership is giving JD an opportunity to expand beyond its base in China to Southeast Asia, US and European market, Google is also ready to combat other rivals like Amazon with extension into China. The deal gave a spike of 2.5% to the shares of JD in Nasdaq accounting to $44.68. Other investors of JD include Tancent holdings Ltd. which is arch-rival of Alibaba and Walmart.
As stated by Atlantic Equities analyst James Cordwell, “given Walmart also has a close relationship with JD, I see (the investment) as further tightening of the Google/Walmart alliance, which seems focused on building a third force in ecommerce beyond Amazon and Alibaba.”
Google has recently been making good investments in Asian market where there is a rising growth of the middle class. The unstructured status in finance, retail, and other areas has made the entire situation a look-alike of battleground for US and Chinese eCommerce players. Google recently ensured its stake in Indonesian ride-hailing firm Go-Jek and is looking forward to invest in the upstart of FlipKart. However, Google has still not commented on its FlipKart interest. Also, the investment in JD is made through the operating unit of Google and not through its parent investment vehicle Alphabet.
Google is expected to get less than 1% stake in JD with almost 27.1 million Class A shares of the company. JD believes that this tie-up would help the company to offer better retail experience to the consumers throughout the world.
JD is making the best of effort to out beat its rival Alibaba and inclusion of Google investment throws light on its interest in international alliances whereas, Alibaba is interested in making domestic tie-ups. Japan’s SoftBank is the major investor in Alibaba.
This tie-up is basically combining the best of two companies. Google’s extended consumer reach and strength in analytics would go hand-in-hand with JD’s expertise in logistics and inventory management. Google will get access to more consumer data which will further boost the usage of Google shopping.