JD.com in talks with Thai Central for $500 million deal

Major e-commerce retailers start the race in Asia. JD.com Inc in China is in talks with Thailand’s Central Group to launch an e-commerce joint venture in Thailand with a planned total investment of $500 million. Meanwhile Alibaba and Amazon are trying to increase competition while suggesting new services.

JD.com deal will help China’s second largest e-commerce retailer to expand its overseas business in Southeast Asia where rivals Alibaba Group Holding and Amazon have just presented a quick delivery service in Singapore.

It is known that JD.com plans to enter the Thai market later this year and use Thailand as a hub to service other countries in the region such as Vietnam and Malaysia, JD.com chief executive Richard Liu told Reuters in June.

The joint venture with Central Group, owned by the billionaire Chirathivat family, Thailand’s third-richest, will focus on e-commerce and finance sectors. The deal has yet to be finalized as the companies are unable to agree on ownership terms, two sources said. While asked JD.com declined to comment on the joint venture and Central Group did not respond to requests for comment.

The joint venture will be another attempt by Central Group to penetrate the country’s fast-growing e-commerce market, after it purchased the Thai arm of online fashion retailer Zalora last year.

Thailand’s e-commerce market, valued at $900 million, is expected to grow 29 per cent over the next 10 years, according to a report from Google and Temasek published in 2016.

The same report estimated that the e-commerce market in Southeast Asia, a region of around 600 million, will soar 16-fold to $88 billion by 2025.

For JD.com, the investment in Thailand would come after it ended talks last month to invest in Indonesian online retailer Tokopedia, which instead raised $1.1 billion from a group of investors including Alibaba, reported Reuters.

In plans – broaden sales channels

JD.com Inc on Thursday said it has reached a deal to sell goods through the popular browser, search engine and app store of Qihoo 360 Technology Co Ltd, as China’s second-biggest e-commerce firm seeks new ways to attract users.

JD said it will share data with Qihoo 360 in a similar way to partnerships with Tencent Holding Ltd, Baidu Inc and news feed app Toutiao, as it broadens sales channels to overcome the Alibaba Group Holding Ltd.

However Unlike its bigger rival, JD chose to compete in a different way. It has invested heavily in storage and logistics leaving it struggling for profitability, adding importance to original means of winning customers.

JD became partners with social media giant Tencent three years ago and revealed that success of the partnership in draw them to do mre deals like that, for example, with search engine provider Baidu earlier this month.

Accelerating revenue growth has pushed its shares up 66 per cent this year. On a quarterly basis, 25 to 35 per cent of new users come from its Tencent partnership, JD said this month – a number that rises to about 50 per cent during the annual “Singles’ Day” sale.

JD said the latest deal will see goods from its e-commerce site advertised on Qihoo apps, and allow users to make purchases without leaving the apps. The arrangement is similar to previous deals where users can purchase goods through Tencent’s WeChat app and Baidu’s search, forum and mapping apps.

One app for everything

Because of specific audience in China, app makers and analysts have been forced to orientate to less but multifunctional apps.

“Chinese users do not really like to go to different apps. They like to stay in one place to do everything,” said Paul Yan, JD‘s digital advertising and marketing specialist.

Unlike Western counterparts such as Facebook Inc’s WhatsApp, the online provider WeChat has its own ecosystem of internal mini-apps, including online shopping, taxi booking and payment system that is almost universally accepted in Chinese cities.

“Western users are accustomed going to different sites for different services,” Yan said. “Chinese users, they pick one place they trust and they want to do everything there.”

It is announced that over a third of WeChat users were active for over four hours a day in 2016, Tencent data showed, while Toutiao said the average user spent 76 minutes in its app. By comparison, Facebook has said its users spend 50 minutes on its site and Messenger.

Leave a Reply

Your email address will not be published. Required fields are marked *