For Google, the investment will benefit in terms of improved analytics and market reach in China, one of Asia’s fastest growing economies.
In an effort aimed at expanding its presence in one of Asia’s fastest growing economy, Google is set to invest $550 million in China’s e-commerce firm JD.com. The strategic move is also aimed at battling Amazon.com, the world’s largest online retailer.
Both companies described the investment as part of a broader partnership that promotes JD.com’s products on Google’s shopping service.
The development could potentially help expand JD.com’s marketshare beyond its traditional base in China and Southeast Asia and help establish a market presence in the U.S. and Europe.
According to Google, the agreement initially would not involve any major new Google initiatives in China, where many of its services are blocked.
Other investors in this investment include, Alibaba Group Holding Ltd, Ten cent Holdings Ltd, French retail giant Carrefour SA, and Walmart Inc.
The investment is part of Google’s effort to ramp up its presence across Asia, a thriving opportunity given the untapped middle class, and lack of infrastructure in retail, finance and other areas.
According to sources familiar with the matter at hand, Google has recently purchased a stake in Go-Jek, an Indonesian ride-hailing firm, and may also invest in Indian e-commerce giant Flipkart.
Google declined to comment on the potential Flipkart deal.
Its investment in JD.com will see the search engine giant get 27.1 million newly issued JD.com Class A ordinary shares which will provide it less than 1% stake in the company, said a spokesman for JD.com
For JD, Google’s investment underscores its resolute determination to grow bigger so as to take on rival Alibaba, which has so far been focusing on the domestic Chinese market.
The Softbank Group Corp is a major investor in Alibaba.
“This partnership with Google opens up a broad range of possibilities to offer a superior retail experience to consumers throughout the world,” said Jianwen Liao, JD.com’s chief strategy officer.