Google Invests $550 Million in Chinese Online Shopping Site JD.com
June 18 2018 - 04:50AM
Dow Jones News
By Liza Lin
SHANGHAI-- Alphabet Inc.'s Google unit is investing $550 million
in Chinese e-commerce retailer JD.com Inc., a move that will deepen
its ties with China and strengthen its foothold in online
shopping.
The partnership will help both companies expand their retailing
presence in Southeast Asia, the U.S. and Europe, working jointly on
retail and infrastructure systems to help brick-and-mortar
merchants go digital.
Under the deal announced Monday, Google bought about 27 million
newly issued shares of Nasdaq-listed JD.com at $40.58 apiece, a
pricing based on the volume-weighted average trading price over the
last 10 days. The deal will put Google's stake in JD.com at about
1%, according to a JD spokesperson.
JD will start selling products on Google Shopping, helping it
reach consumers in the U.S. and Europe as it seeks to diversify
beyond China's highly competitive e-commerce market.
The deal will help Google to expand its online retailing
business and could boost advertising revenue, which has been
threatened by Amazon.com Inc. recently as businesses increasingly
shift ads to the internet shopping company.
The JD investment comes as Google seeks to strengthen its
connections in China. Its search engine has been blocked here since
2010, when the company refused to censor content. However, it still
maintains a sizable presence in the country, with three offices
locally employing more than 600 staff, mostly engaged in ad sales
and engineering.
Over the past two years, the Mountain View, CA-based company has
sought to improve relations and expand its presence in China.
Senior executives including Chief Executive Sundar Pichai have made
two trips in the last seven months, meeting lawmakers and industry
academics in two high-profile conferences organized by the
Chinese.
In December, Google launched an artificial intelligence lab in
Beijing to tap the growing market for AI talent. Most recently, it
introduced the Files Go app in China, a digital file storage
application for emerging-market consumers.
Beijing-based JD, which counts Walmart Inc. and Tencent Holdings
among its shareholders, has struggled to gain market share from
industry leader Alibaba Group Holding in China's online shopping
market.
JD held about 25% of China's business-to-consumer internet
retail market share in the first quarter of 2018, behind Alibaba's
Tmall platform, which held a 60% share, according to industry
researcher Analysys. JD's market share was lower than a year ago,
when the firm held almost 27% of the market, Analysys data
shows.
Write to Liza Lin at Liza.Lin@wsj.com
(END) Dow Jones Newswires
June 18, 2018 04:35 ET (08:35 GMT)
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