Daily Management Review

China's E-Commerce Player JD.Com Will Get Investment Of $550 Million From Google


06/19/2018




China's E-Commerce Player JD.Com Will Get Investment Of $550 Million From Google
China's second-largest e-commerce player JD.com would get an investment of about half a billion dollars from Google., announced the U.S> te3ch giant on Monday.
 
The companies said in a statement that $550 million in cash would be invested into JD.com by Google as a part of its strategic partnership with the Chinese company, Google announced. In exchange for the investment, over 27 million newly issued JD.com Class A ordinary shares at an issue price of $20.29 per share would be given to Google. Based on the volume-weighted average trading price over the prior 10 trading days, the amount would be equal to $40.58 per American depository share. JD.com listed American depository shares in its group company on the Nasdaq in 2014.
 
Reduction of friction in a number of key markets such that Southeast Asia and enhancement of the personalization experience of shoppers would be the primary purpose that the investment form Google would serve, said the two tech companies.
 
As a part of its role in the deal, JD.com plans to identify a range of items that would be available for sale in places like the U.S. and Europe through Google Shopping which is a tool that allows users search for products on e-commerce websites and compare between the various prices that are offered.
 
Products gain much more visibility and allows customers to make online purchasing easy when retailers work together with Google. In terms of the gains that Google is looking for, winning back product searchers by users on to its service from Amazon is one of the aims while also preparing to be a leader in the future of voice powered searching and ordering in e-commerce.
 
This deal with Google offers the opportunity for JD.com to venture in to new markets outside of China specifically in an environment when the trade tensions between the U.S. and China is on the rise.
 
A trade war would be "horrible" and it would result in a number of American brands being hit, said Founder and CEO of JD.com – Richard Liu, to the media recently. Further, the company has also halted its expansion plans into the U.S. because of the increasing trade tensions between the two trading partners.
 
Within the huge home market of China, Jack Ma’s Alibaba is the main competitor for this Chinese e-commerce company. in order to win over consumers, both the company have made significant investments in technology, retail and logistics.
 
The effort of JD.com to make use of drone s for delivery in remote areas of China while keeping cost of logistics low is an example of such investments.
 
Further, Chinese tech giant Tencent – a rival of Alibaba, is amongst the major supporters of the e-commerce player. Tencent has business interests in areas including social networks, digital payments and gaming and the largest social media platform of China WeChat. JD.com is able to make use of WeChat for sale of its products because of its partnership with Tencent.
 
(Source:www.cnbc.com)






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