Chinese online retailer JD.com is considering starting an e-commerce joint venture whose planned total investment would be half a billion dollars. The joint venture talks with the Central Group of Thailand would help the second biggest online retail company in China get a foothold in Southeast Asia and further diversify its business beyond its domestic market.
Currently the only other foreign country that JD.com has a presence in is Indonesia where the Chinese online retailer runs Traveloka, a travel startup, and an e-commerce platform. A presence in Southeast Asia would also assist JD.com catch up with bigger rivals Amazon and Alibaba who already have a presence. At the moment the two are fighting for market share by introducing new services with the most recent being quick deliveries in the city state of Singapore.
Regional hub
According to the chief executive officer of JD.com, Richard Liu, the Chinese online retailer intends to launch in Thailand later in the year. It will use the country as a hub for servicing the region and this includes countries such as Malaysia and Vietnam.
Besides e-commerce, JD’s joint venture in Thailand will concentrate on the financial sector. An agreement on ownership terms is holding back the conclusion of the deal. The control of Central Group is in the hands of the Chirathivat family.
Fast-growing sector
This will not be the first time that Central Group is eyeing e-commerce which is a fast growing sector in Thailand. Last year the firm acquired the Thai unit of Zalora, an online fashion retailer. The value of e-commerce market in Thailand is currently estimated to be $900 million and in the next decade it is projected to grow by 29%. This is as per a report published last year by Temasek and Google. Currently the major players in the Thai e-commerce sector include Lazada, an outfit backed by Alibaba; Ascend, a unit of Thailand’s CP Group and 11 Street from South Korea.
The report prepared by Google and Temasek expects Southeast Asia’s e-commerce market to grow 16-fold by 2025 and reach a figure of $88 billion. The population of the region currently stands at about 600 million people.
JD’s planned joint venture in Thailand comes a little more than a week after the online retailer slipped back into loss territory in the second quarter results. The retailer reported a net loss of $42.3 million despite revenues increasing by 44%.