Google announced on Monday that it will invest $550 million in cash in China’s second-largest e-commerce company, JD.com, opening the door for the latter to get in front of U.S. consumers and securing the tech giant’s stake in Asia’s rapidly growing e-commerce market.
The partnership is the latest evidence that some of the world’s biggest companies are putting up a united front against the twin threats of Amazon and Alibaba, the Hangzhou-based conglomerate with a market cap north of $500 billion and ambitions in luxury fashion, tech-powered physical retail and cutting-edge AI.
As part of the deal, Google will receive more than 27 million newly issued JD.com Class A ordinary shares, and some of the e-commerce company’s listings will being appearing in Google Shopping listings, valuable real estate for brands that want to raise awareness among U.S. and European customers. The companies also said they will leverage their technological, supply chain and logistics expertise to build retail solutions for markets including Southeast Asia, where the battle for online shopping dollars is heating up.
While $550 million is a sizable figure by almost any measure, JD.com has a market cap of over $60 billion, so the investment gives Google a 1 percent stake. It also has backing from Tencent, the Chinese tech behemoth that operates WeChat, the country’s largest messaging app. Tencent recently struck a deal with Walmart to switch its more than 400 stores in China to WeChat Pay from Alipay, Alibaba’s mobile payments service. JD.com and Walmart have also had a partnership since 2016, and the retail chain set a record this spring for online orders placed for a store on JD.com’s homepage with the opening of its “smart” supermarket in Shenzen.