Google announced recently that it is investing about $550 million (approximately Rs 3,400 crore) in China’s second largest e-commerce company JD.com. As part of the deal, Google will receive 27 million newly issued JD.com Class A ordinary shares in return. That gives it less than 1 percent stake in the company.
The partnership also provides Google an opportunity to work with JD.com in developing a solid retail infrastructure in the Asian market, and compete better with the other companies in the space such as Amazon. The company understands that it is losing grip in the e-commerce sector thanks to Amazon and other Chinese entrants in market. For that purpose, it is investing heavily across Asia. Reuters reported recently that Google might also be consider investing in the Indian e-commerce website Flipkart.
On the other hand, the new partnership gives JD.com an opportunity to sell products outside of China and compete better with its biggest competition Alibaba. JD.com has already listed a few products for sale in U.S. and the European markets through Google Shopping service, giving it more visibility on a global level. The simple goal here is to merge Google’s market reach and analytics strength with JD.com’s logistics and inventory management skills.
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In order to compete better with Alibaba, JD.com is also working on other initiatives with a number of companies. The e-commerce websites biggest backing comes from Tencent, which has a huge presence in social networking, digital payments and the gaming sector. It also operates China’s biggest chat platform called WeChat, though which JD.com sells directly to its customers. JD.com was also reported to be working with Walmart, in order to help the company, open a high-tech super market in China, where customers could pay for products through their smartphones.