Google to invest $550m in e-commerce giant

- REUTERS, CALIFORNIA

Jun 20, 2018-

Google will invest $550 million in Chinese e-commerce powerhouse JD.com, part of the US internet company’s efforts to expand its presence in fast-growing Asian markets and battle rivals including Amazon.com.

The two companies described the investment announced on Monday as one piece of a broader partnership that will include the promotion of JD.com products on Google’s shopping service. This could help JD.com expand beyond its base in China and Southeast Asia and establish a meaningful presence in US and European markets.

JD.com’s US-listed shares rose 0.4 percent to close at $43.76 on Nasdaq.

Company officials said the agreement initially would not involve any major new Google initiatives in China, where the company’s main services are blocked over its refusal to censor search results in line with local laws.

JD.com’s investors include Chinese social media powerhouse Tencent Holdings Ltd, the arch-rival of Chinese e-commerce leader Alibaba Group Holding Ltd, and Walmart Inc.

The partnership not only lets Google bolster its retail ambitions in China but also allows it to further tighten its relationship with Walmart. Together, the two companies could challenge the dominance of Amazon and Alibaba in key markets around the world, analysts said.

In the past year, Google has partnered with Walmart on multiple fronts.

In August 2017, the two companies joined forces to offer hundreds of thousands of Walmart items on Google’s voice-controlled Google Assistant platform to counter the dominance of Amazon in the voice shopping market. In March, Reuters reported a new programme where Google was teaming up with retailers like Walmart, allowing them to list their products on Google Search, as well as on the Google Express shopping service to better compete with Amazon.

Google is also reportedly pursuing picking up a stake in India’s Flipkart, where Walmart picked up a 77 percent stake for $16 billion.

Google declined to comment on the rumored Flipkart deal.

Google is stepping up its investments across Asia, where a rapidly growing middle class and a lack of infrastructure in retail, finance and other areas have made it a battleground for US and Chinese

internet heavyweights. Google recently took a stake in Indonesian ride-hailing firm Go-Jek.

The JD.com investment is being made by the operating unit of Google rather than one of parent company Alphabet’s investment vehicles.

Google will get 27.1 million newly issued JD.com Class A ordinary shares as part of the deal. This will give them less than a 1 percent stake in JD, a spokesman for JD said.

Company officials said the deal would marry Google’s market reach and strength in analytics with JD.com’s expertise in logistics and inventory management.

Published: 20-06-2018 08:23

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