JD.com Says Its Global Ambitions Will Soon Include a Sweeping Presence in Europe and a California Beachhead
Expansion-minded ecommerce company JD.com says it will begin to invade the European market by next year, challenging Amazon’s ecommerce dominance there first by launching its own platform and delivery services in France, with the U.K. and Germany soon to follow.
Chairman and CEO Richard Liu told Financial Times he expects JD’s reach to cover the European continent within “a few years.”
For starters, JD.com (Nasdaq: JD) expects to spend $1.24 billion to build a French logistics network by 2020.
Liu, the ambitious CEO, is already laying the ground for JD’s British entree, signing an agreement with the British government last week to sell $2.8 billion of British merchandise in China by 2021. Liu met with British Prime Minister Theresa May last week during her visit to Beijing.
The 20-year-old JD, with headquarters in Beijing, has struggled to distinguish itself from its larger domestic rival Alibaba while yearning for the kind of global impact that U.S. giant Amazon commands. Liu complained at the World Economic Forum in Davos last month that the U.S. was engaging in “serious” protectionism against Chinese companies.
“One day it will hurt the U.S. economy too,” Liu warned.
In December, Liu announced JD’s own U.S. initiative, establishing an operation in Los Angeles by the end of 2018, challenging both Alibaba and Amazon on California’s Asian-friendly West Coast.
Liu said in Davos that he expects half of JD’s revenue to come from overseas within a decade. “We will continue to invest until we achieve our goal,” Liu said.
Liu has indicated in the past that his strategy is to sell high-quality Chinese products at lower prices than his competitors, with revenue evenly distributed between Southeast Asia, the U.S. and Europe.
JD distinguishes itself from Alibaba and Amazon in that it manages its own logistics network.
“Our efficiency mostly comes from the management technology of our logistics. We built our logistics to be online from day one,” Liu told the Financial Times. “Companies like DHL built their systems on decades-old technology, it’s very hard for them to overturn their systems overnight.”
In Europe, though, JD expects to recruit local partners to provide last-mile delivery service, though the company expects to own its own warehouses.
The company has enlisted some powerful backers to reach its goals. JD is Walmart’s largest partner in China and commerce giant investment company Tencent is finalizing a deal top buy 15 percent of JD’s logistics branch. Tencent and JD have already partnered in a number of deals, including a co-investment of $863 million in VIPShop Holdings.