Google announced on Monday that it will invest $550 million in Chinese e-commerce powerhouse JD.com, Alibaba’s main rival.
Under the partnership, JD.com products will appear on Google's shopping service, giving JD.com access to consumers outside Asia, while Google can apply the Chinese e-commerce company's supply chain and logistics expertise to its technology.
The investment is also part of the US internet giant’s efforts to expand its presence in fast-growing Asian markets and battle rivals including Amazon.com.
The two companies will jointly develop retail solutions in Southeast Asia, the latest battlefield among global online commerce giants such as Alibaba, JD.com and Amazon. Southeast Asian consumers are forecast to spend $88.1 billion online by 2025, according to Google.
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.
For JD.com, the Google deal shows its determination to build a set of global alliances as it seeks to counter Alibaba, which has been more focused on forging domestic retail tie-ups. Japan’s SoftBank Group Corp, which is making big internet investments around the globe, is a major investor in Alibaba.
“This partnership with Google opens up a broad range of possibilities to offer a superior retail experience to consumers throughout the world,” said Jianwen Liao, JD.com’s chief strategy officer, in a statement.
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.
Google recently took a stake in Indonesian ride-hailing firm Go-Jek, and sources have told Reuters that it may also invest in Indian e-commerce upstart Flipkart.
Google declined to comment on the rumored Flipkart deal.
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.
JD.com is China's second-largest e-commerce company after Alibaba. It counts Tencent Holdings, the developer of the WeChat messenger app and a key rival of Alibaba, as its investors.
