Google, which has been increasing its presence in China in recent times, has intensified that push by agreeing to a strategic partnership with e-commerce firm JD.com, which will see Google purchase $550 million worth of shares in the Chinese firm.
The deal, businessamlive learnt, is aimed at combining JD’s expertise in logistics and supply chain with Google’s technology to experiment with changes in how people shop
It involves Alphabet’s Google buying newly issued Class A shares at $20.29 per share, equivalent to $40.58 per ADS, the companies said in a joint statement Monday.
The pair plan to explore joint development of retail solutions in regions, including South East Asia, the US and Europe. The deal comes just a week after Google struck an alliance with Carrefour to sell groceries online in France through the US company’s platforms including Home and Assistant.
The flurry of activity signals Google’s growing ambitions in e-commerce. The French partnership will allow consumers to order staples through Google services on their smartphones, tablets or other devices. The latest deal is aimed at combining JD’s expertise in logistics and supply chain with Google’s technology to experiment with changes in how people shop.
“We are excited to partner with JD.com and explore new solutions for retail ecosystems around the world to enable helpful, personalised and frictionless shopping experiences that give consumers the power to shop wherever and however they want,” said Philipp Schindler, Google chief business officer.
Google and JD have teamed up elsewhere. They both participated in the latest funding round of Indonesia’s Go-Jek, a challenger in the ride-hailing business in South East Asia.
JD.com is valued at around $60 billion, based on its NASDAQ share price, and the company has partnerships with the likes of Walmart and it has invested heavily in automated warehouse technology, drones and other “next-generation” retail and logistics.
The move for a distribution platform like Google to back a service provider like JD.com is interesting since the company, through search and advertising, has relationships with a range of e-commerce firms, including JD.com’s arch rival Alibaba.
But it is a sign of the times for Google, which has already developed relationships with JD.com and its biggest backer Tencent, the $500 billion Chinese internet giant. All three companies have backed Go-Jek, the ride-hailing challenger in Southeast Asia, while Tencent and Google previously inked a patent-sharing partnership and have co-invested in startups such as Chinese AI startup XtalPi.
JD, which competes with giant Alibaba, came under fire last month by a hedge-fund manager, who called China’s No. 2 e-commerce operator over-valued and criticised its “silly” investments.
Kok Hoi Wong, chief investment officer for APS Asset Management, said his own internal valuation for the $63 billion company was “a tiny figure”.
JD shares fell after the attack, but have more than recovered since then. JD was little changed in US trading on Friday at $43.59.
Frontpage October 18, 2019
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