Combine Google’s technology with Chinese e-commerce giant JD.com, and you get a strategic partnership that brings a massive online shopping monster that can take on fierce rivals like Amazon and Alibaba from Southeast Asia to the United States—and eventually Google will make its way back to China.
Google announced Monday it would acquire a $550-million stake in Chinese e-commerce giant JD.com in a move that will allow the pair to sell online wares together on three continents: Europe, Asia and North America.
This is where Google (GOOGL) technology boost China’s second-largest e-commerce outfit, giving the former a leg up against American giant Amazon (AMZN), and the latter a weapon to rival China’s number one behemoth, Alibaba (BABA).
And it’s no secret that JD.com is gunning for these giant retailers because it’s CEO, Richard Liu, told reporters in the first quarter of this year that it had Amazon’s shopping prowess in Europe in its sights and planned to move on that by next year.
Pushing up the schedule a bit, JD.com’s chief strategy officer told reporters on Monday that the new partnership was heading toward a “superior retail experience” for consumers globally.
And nothing—not even Trump’s tariff campaign—can crush Silicon Valley’s interest in Chinese companies.
Getting into China in the e-commerce section means breaking the stranglehold of Alibaba, and getting past government censorship.
Maybe that’s why Google is only investing $550 million, which is nothing for this tech giant, but as the New York Times points out, in this case, half a million could have a huge impact on what comes next—specifically, on getting back into China for Google.
For now, the target is Southeast Asia, not China, because Google’s main services are still blocked by Beijing because it refuses to censor search results in accordance with local laws, according to Reuters. For now, Google’s search engine, maps, Gmail and YouTube are all banned in China.
Not being in China is a major blow for Google Shopping because Amazon is there.
Neither Google nor JD.com have mentioned anything about China shopping, with the initial focus on Southeast Asia.
And while it’s early days, both Amazon and Alibaba do have reason for concern. Google’s deal with Walmart to sell the retail giant’s wares through Google Assistant last year was one of the first major indications that Google Shopping is seeking to become much bigger. And Walmart is also an investor in JD.com.
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Google’s alliance with JD.com is essentially an alliance with giant Tencent, Alibaba’s fiercest rival and the force behind the huge WeChat cat and payment services app.
Beyond Monday’s announcement, Amazon and Alibaba will be looking at what Quartz calls an emerging deal pattern for Google and JD.com, which have been investing in various projects in Southeast Asia recently.
In January 2016, JD.com acquired the e-commerce arm of Walmart’s China business, right before Walmart increased its stake in the Chinese company, and then last summer, we saw Google’s own deal with Walmart. Then in March this year, Walmart stopped using Alibaba’s Alipay in western China, aligning solely with Tencent’s WeChat … and the strategy continues its pattern, working its way back to China, and clearly bent on taking on Amazon and Alibaba.
By Michael Kern for Safehaven.com
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