Google has been eying entrance vehicles into the Chinese market for some time.
Summary
On June 18, Google announced that it would be investing $550 million in JD.com, also known as Jingdong. JD is China’s biggest e-commerce company and claims net revenue of 100.1 billion Chinese Yuan (16.0 billion USD) in Q1 2018. As per the investment agreement, JD will join the Google Shopping advertising platform and in return, JD will work with Google on other e-commerce projects in Europe, Southeast Asia and the United States. This includes integrating into retail giants like Walmart. The Chinese retailer has already expanded its market into Southeast Asia by setting up online retail businesses based in Indonesia and partnering with commerce ventures in Thailand and Vietnam. For JD.com, China has provide to be a massive, profitable market and enjoys an unrelenting growth of internet users. However, for many non-Chinese companies, breaking into the market have proven difficult without the right partner. In 2017, 40.7 million new users were added in China, bringing the total to 772 million, just over half the country’s total population. Google left China’s market in 2010 due to multiple disagreements over censorship and regulator issues with Beijing, but this agreement may be a be part of Google’s strategy to reclaim a share of the Chinese market. On December 13, 2017, Google built a China-based research center devoted to artificial intelligence in Beijing and signed an agreement with Tencent, the Chinese internet conglomerate, to develop artificial intelligence.
FAO Global Assessment
The importance of the Chinese e-commerce industry is well illustrated by Google’s persistence to regain a presence in China. American firms should consider partnering with websites familiar to Chinese consumers, such as JD.com and other big Chinese online retailers like Taobao and Tmall, three companies that dominate 80% of the market, in order to broaden their reach, either by selling products or advertising. There are multiple facets, legal implications, and public relation considerations that should be taken into account, and choosing the right local partner
Related Links
- New York Times: Google, Rebuilding Its Presence in China, Invests in Retailer JD.com
- Reuters: Google to invest $550 million in China e-commerce giant JD.com
- CNN Money: Google bets $550 million on Chinese e-commerce firm JD.com
- Investor’s Business Daily: JD.com, Google Forge Alliance Spanning Online Shopping, Retail
- New York Times: Google, Looking to Tiptoe Back Into China, Announces A.I. Center
- Sohu: 行业报告 | 2018年中国快递行业市场前景研究报告 (2018 China Express Delivery Market Report)
- Jianshu: 电子商务的历史和发展现状 (E-Commerce: Its History and Development)
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