- 2018-09-27
Google's $550 million stake in JD.com
Google will spend US$550 million to acquire some shares of Chinese e-commerce group JD.com, a move that will bring the two companies to cooperate in retail and other areas.
This transaction acquired less than 1% of JD’s shares. The transaction is the latest step in Google's quietly formulated strategy in China. Google’s core search engine has been blocked from China since 2010.
This move has also improved the qualifications of the American company in the retail industry. Previously, Google has formed alliances with retailers such as Walmart and Carrefour in recent months.
The partnership between Google and China’s second-largest e-commerce group aims to combine the Internet company’s user base with JD’s logistics expertise and infrastructure to develop retail opportunities in Southeast Asia, the United States and Europe.
JD.com will initially provide goods through Google’s shopping site—very similar to how Google currently works with other retailers—and then expand into new markets outside of China. The fragmented Southeast Asian market is seen as fertile ground, and Alibaba's Lazada is expanding in the region.
JD has been seeking international expansion. The company’s founder and CEO Richard Liu told the Financial Times earlier this year that he hopes that half of JD’s profits will come from outside China in the next 10 years.
For Google, this transaction will help it use JD.com's vast logistics and warehousing network.
The American company is stepping up its deal-making efforts in China. The company has 700 employees in China and has long maintained an advertising business of more than $1 billion, advertising for Chinese manufacturers and service providers, such as hotels, seeking to attract international customers.
Google this year signed a long-term patent cross-licensing agreement with Chinese technology group Tencent (Tencent) covering multiple products and technologies. Google also opened its third China office in the southern city of Shenzhen. Shenzhen is home to many technology and hardware companies in China, including Tencent and Huawei. Google recently opened an artificial intelligence laboratory in Beijing.
In addition to closing deals with some of the largest players in the Chinese technology industry and expanding its presence in China, Google has been launching products and investing in start-ups.
In May, the company launched the Files Go application in China to help users make better use of their storage space. Prior to this, Google has launched a translation application and augmented reality platform ARCore in China. As Google’s online application store, Google Play, is not available in China, these applications are sold through the Chinese application store.
Google became the second largest American investor in JD.com. Wal-Mart holds about 11% of the shares of the home appliance business group. Tencent owns about 20% of JD.com.