Jakarta -Google will invest US $ 550 million in Chinese JD.com (JD.O) e-commerce company as an expansion effort in the fast-growing Asian market amidst fierce competition especially with Amazon.com (AMZN.O).
Reported by Reuters, the two companies describe this investment as part of a wider partnership with JD.com product promotion features in Google’s shopping service.
This can certainly help JD.com to grow beyond China and Southeast Asia base by building business in US and European markets.
The company said the agreement initially did not involve Google’s new feature in China, where Google’s main service was blocked after refusing to censor search results to comply with local law.
JD.com’s investors include China’s social media company Ten Cent Holdings Ltd. (0700 HK), China’s leading e-commerce leader Alibaba Group Holding Ltd (BABA.N) and Walmart Inc (WMT.N).
Google is stepping up its investment in Asia, where the middle-class economy is growing rapidly but infrastructure in retail, financial and other areas is relatively minimal, making Asia the battlefield for US and Chinese internet giants.
Google recently bought shares in Indonesian company Go-Jek, sources told Reuters that Google is also likely to invest in an Indian e-commerce company, Flipkart.
Google declined to comment on investment issues with Flipkart. In addition, investment in JD.com is done by Google’s operations unit, not from one parent company called Alphabet Inc. (GOOGL.O).
As part of the deal, a JD.com spokeswoman said Google will get 27.1 million new Class A shares or less than 1% stake in JD.com.
For JD.com, Google’s deal demonstrates their determination to build a global set of aliansu to fight Alibaba, which is more focused on establishing domestic retail relationships.
The Japanese company Softbank Corp. (9984.T) is the main investor of Alibaba.
“This partnership with Google opens up possibilities to offer superior retail experience to consumers worldwide,” Jianwen Liao, JD.com’s chief strategy officer, said in a statement.
Company officials said the deal would synergize Google’s market reach and power in analysis with JD.com’s expertise in logistics and inventory management.