Internet giant Google will invest $550 million in Chinese second largest e-commerce house, JD.com. Google is making all efforts to compete with Amazon in online shopping and exploring Asian fast-growing markets. On the other hand, JD.com plans to take on Jack Ma’s Alibaba, the leading e-commerce site of China.
In a joint release, both the online powerhouses stated that they have “collaborated on a range of strategic initiatives, including joint development of retail solutions in Europe, the U.S. and Southeast Asia.”
Google Chief Business Officer Philipp Schindler said, “We are excited to partner with JD.com and explore new solutions for retail ecosystems around the world to enable helpful, personalized and frictionless shopping experiences that give consumers the power to shop wherever and however they want.”
Structure of Strategic Partnership
As part of a strategic investment, Google will put $550 million in cash into the Chinese e-commerce player. Correspondingly, Google will secure more than 27 million newly issued JD.com Class A ordinary shares at an issue price of $20.29 per share.
Both the tech companies aim to create better online retail infrastructure and deliver frictionless shopping experience. The strategic partnership goal here is to merge JD.com’s experience and technology in inventory management, logistics and supply chain with Google’s worldwide online presence, and marketing expertise.
The search giant will promote JD.com’s products on Google Shopping service. This will enable the Chinese e-commerce company to broaden its presence outside China and Southeast Asia.
“This partnership with Google opens up a broad range of possibilities to offer a superior retail experience to consumers throughout the world,” mentioned Jianwen Liao, JD.com’s chief strategy officer, in a statement.
JD.com And Its Other Affiliations
Listed on NASDAQ, JD.com valuation is around $60 billion. It has invested heavily in next-generation technology such as automated warehouses and experimenting with drone delivery system.
Further, the Chinese e-commerce setup has back support of Tencent Holdings Limited, Google’s Chinese rival. Tencent is also operating China’s leading social media app, WeChat. Thus, the affiliation between JD.com and Tencent allows the former company to sell products directly to consumers through WeChat app.
Over here, it is interesting to highlight the business dynamics in terms of investment by tech companies. Google and Tencent along with JD.com have invested in Indonesian ride-hailing service, Go-Jek. On the other hand, JD.com’s rival, Alibaba and Go-Jek’s competitor Uber, both are supported by Japan’s SoftBank.
Similarly, Tencent and Google have earlier signed a patent sharing agreement and have together invested in multiple start-ups such as Chinese AI startup XtalPi.
Moving on, JD.com has also linked with the US retail giant Walmart Inc. The world’s largest retailer has opened its first high-tech supermarket in China. Here the consumers can use their Smartphone to purchase items available on the Walmart’s store on online platform JD Daojia, a subsidiary of JD.com.