JD turns to Google, Walmart to build global e-comm empire

Bloomberg

Richard Liu built an e-commerce giant in China by tapping into the nation’s appetite for technology. As his JD.com Inc. sets its sights on global expansion, he’s turning to others for help: Google and Walmart Inc.
Just a few months after Google bought a $550 million stake in JD, Liu said he’s in the early stages of strategic planning with the search giant to win customers outside its home market. Walmart will work with JD to expand operations in China, the US and South East Asia, Liu said.
JD ranks behind only Alibaba Group Holding Ltd. when it comes to e-commerce in China and has started pushing into physical stores in the country, although its incursions overseas have mostly been limited to Thailand, Indonesia and
Vietnam. But Liu has his eyes on the affluent consumers of Europe and the US as he makes substantial investments in the infrastructure needed to supply millions of customers around the world.
“Our ambition is to expand our supply chain ability to the whole world — to connect any brand, any goods and any consumer globally,” Liu said.
Walmart and JD have already teamed up in China as Liu agreed to buy the US company’s online operations in the country. In return, the Bentonville, Arkansas retailer bought a stake in the business.
Walmart also co-led a $500 million fundraising in August for JD affiliate Dada-JD Daojia, which connects fleets of motorbike delivery staff with merchants in hundreds of Chinese towns and cities.
Liu said that while its partnership with Walmart would be global, any work with Google would be “mostly focused outside of China.” His initial edge over Amazon.com and other foreign rivals would be the ability to bring cheaper, high-quality Chinese goods abroad followed by the expansion of its supply chain, he said. The international push comes at a challenging time, with JD shares slumping amid rising costs, competition and an expensive expansion that now sees the company operate 11.6 million square metres of space across 521 warehouses in China.
Wayne Peters, chairman of Peters Macgregor Capital Management and a shareholder in JD.com, said that investment is an incredibly valuable asset for the company’s future.
“Richard under-promises and over-delivers,” said Peters. “What we like are CEOs who look to the long term. We’re more interested in that than those who are just interested in beating the street. ”
Liu’s high-spending strategy also has plenty of detractors, especially those who see unfinished business in China. JD’s share price hit a record high in January only to tumble more than 35 percent since then after failing to deliver the full-year profit that many analysts had expected. In the June quarter alone, the company had a net loss of 2.2 billion yuan.
JD’s business model is more akin to Amazon than Alibaba. It holds and sells its own inventory and also allows other vendors on its platform while its larger Chinese rival provides a marketplace for merchants and makes most of its money from advertising and marketing services.