Google revealed today, June 18, about its investment of $550 million in Chinese eCommerce giant JD.com. Both the companies said that it would be a strategic partnership.
As Google invests in JD, it will benefit Google by over 27 million newly issued ordinary shares of JD.com at an issue price of $20.29 per share. This is equal to $40.58 per American Depository share in the last ten working days’ volume-weighted average trading price.
The Google JD investment partnership aims to advance retail infrastructure, provide an improved personalized shopping experience, and reducing friction in markets in Southeast Asia and other regions. Reduction of friction will be greatly helped if JD succeeds in its plan to categorize items based on regions and available online sites, offering comparisons of price by different sellers.
The earn of the shares from this partnership will see Google’s convenient product visibility in online shopping for the consumers as they expand further in its course to race Amazon while staying true to voice-powered future of eCommerce.
As for JD, the agreement will enable it to expand outside China, that too amid the trade tensions between Washington and Beijing. The company’s founder and CEO Richard Liu expressed concerns that a probable horrible trade war would badly affect American brands. He pointed out that this upcoming possibility has his company postponing expansion plans in the US.
While competing at home with the leading Chinese eCommerce player Alibaba, JD would seem to feel comfortable at the kind of support it possesses already. Alibaba’s chief rival Tencent operates WeChat, China’s largest social messaging app, and it is partners with JD, allowing sales directly via the vast platform.
JD is additionally in a similar partnership with Walmart in the grocery business, only being on the other end of the table. Its online store JD Daojia is being used by Walmart where the latter has opened a high-tech supermarket for Chinese consumers.
JD could just be the world’s next big eCommerce giant from China in coming future, following Alibaba. Stay tuned for this!
Google will be, you know.