Google investing $743m in Chinese e-commerce giant

Workers sorting boxes and parcels at a JD.com logistics station in Xi'an, China. Google's investment in the Chinese e-commerce powerhouse is part of a broader partnership that will include the promotion of JD.com products on Google's shopping service
Workers sorting boxes and parcels at a JD.com logistics station in Xi'an, China. Google's investment in the Chinese e-commerce powerhouse is part of a broader partnership that will include the promotion of JD.com products on Google's shopping service. But the agreement initially will not involve any major new Google initiatives in China.PHOTO: REUTERS

JD.com deal part of US tech firm's move to expand in Asia

SINGAPORE • Google will invest US$550 million (S$743 million) in Chinese e-commerce powerhouse JD.com, part of the US Internet giant's efforts to expand its presence in fast-growing Asian markets and battle rivals, including Amazon.

The two companies described the investment as one piece of a broader partnership 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 South-east Asia and establish a meaningful presence in United States 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 - the arch-rival of Chinese e-commerce leader Alibaba Group Holding - and Walmart.

Google is stepping up its investments across Asia, where a rapidly growing middle class and a lack of infrastructure in retail, finance and other areas have made it a battleground for US and Chinese Internet giants.

JD.com's investors include Chinese social media powerhouse Tencent Holdings - the arch-rival of Chinese e-commerce leader Alibaba Group Holding - and Walmart. Google is stepping up its investments across Asia, where a rapidly growing middle class and a lack of infrastructure in retail, finance and other areas have made it a battleground for US and Chinese Internet giants.

Google recently took a stake in Indonesian ride-hailing firm Go-Jek, and sources have told Reuters that it may also invest in Indian e-commerce upstart Flipkart.

Google declined to comment on the rumoured Flipkart deal.

The JD.com investment is being made by the operating unit of Google rather than one of parent company Alphabet's investment vehicles.

Google will get 27.1 million newly issued JD.com Class A ordinary shares as part of the deal.

This will give it less than a 1 per cent stake in JD, said a spokesman for JD.

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, 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 JD.com chief strategy officer Liao Jianwen.

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.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 19, 2018, with the headline 'Google investing $743m in Chinese e-commerce giant'. Print Edition | Subscribe