JD is planning to go global – with a little help from its friends
2018 has been a rough ride for JD.com so far. The number-two name in Chinese online retail (Alibaba, of course, being number one) has been hit hard by the trade issues between China and the U.S., as well as brutal competition at home that ate into its profits in the last quarter. That said, however, the company is still well positioned to expand – and it has ambitions that lie beyond China’s borders. A recent $550 million investment into the company from Alphabet, and a partnership with Walmart, could be the keys to attaining that goal.
The company’s CEO Richard Liu said “Our ambition is to expand our supply chain ability to the whole world – to connect any brand, any goods and any consumer globally.” The company’s partnership with Walmart will be global in scope – while its work with Alphabet will be focused outside of China, as Google and most of its other services are blocked (at least for now) in the country.
According to Liu, JD will have an instant advantage over Amazon: it will bring higher quality, lower cost, Chinese goods to market. In an effort to prepare for this mammoth amount of business, Liu has overseen an expensive expansion that puts JD in charge of 11.6 million square meters over 521 warehouses in China. According to Wayne Peters of Peters Macgregor Capital Management, this space – as well as the strategic mind that commissioned it – is an asset. He said:
“Richard under-promises and over-delivers. 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 is definitely thinking long term. He said: “We will spend another 10 or maybe 20 years to expand to the whole world. So you cannot achieve a goal within three years or five years.”
Dominion holds JD.com and Alphabet in its Global Trends Ecommerce Fund.
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