Chinese retail titan JD.com muscles in on German market

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23.07.2018

JD.com takes aim at Amazon in Europe

The refrain in Europe has been familiar for a while: the Chinese are coming. Those wondering what exactly that means may be interested to hear what the CEO of one of China’s biggest companies has to say on the subject.

Chinese e-commerce company JD.com, an online retail giant with more than 300 million active users, intends on opening an office in Germany in 2018 with a view to establishing itself in Europe, according to its chief executive.

In an interview with German business daily Handelsblatt, Richard Liu, who heads the Fortune 500 company, made it clear that JD.com has established a clear European plan, based initially around the German market.

"I traveled to Berlin to achieve two goals," he told the newspaper during a business trip to the German capital. "I want to expand the business. I'm no longer just interested in selling products from Germany to China, I also want to sell products in Europe."

Read more: Google invests in Alibaba rival JD.com

Mr Liu said that JD.com's plan was to launch a concrete strategy for "tapping" the e-commerce market in Europe before the end of the year. "The final decision is pending," he said. "It's just about clarifying the details. But our goal is clear."

Ding dong, it's Jingdong

Also known as Jingdong, the Beijing-based company is the main competitor to Alibaba in China's huge online commerce market. 

Founded 20 years ago, it took in revenues of just under $56 billion in 2017 although it has struggled to make a profit in the face of high operating costs.

Partly owned by Chinese multinational conglomerate Tencent Holdings, JD.com has grown rapidly in recent years and has been prioritizing "high-tech" delivery, namely through the use of drones, Articial Intelligence (AI) and robots.

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Its advance towards the European market, signaled clearly by Liu, is not entirely surprising. In April this year, JD.com took a 33 percent stake in the Chinese unit of German insurance giant Allianz. Although that was a deal geared towards the Chinese financial services market, it was an indicator of the growing network of European business relationships the Chinese company has been establishing.

Liu told Handelsblatt he was planning "globally," with an aim to sell "even local products" in Europe. That suggests a plan to target the biggest players in the highly competitive European e-commerce market where Amazon, despite its dominance in the USA and elsewhere, has to battle hard for market share behind German companies Zalando and the Otto Group, as well as a wide array of strong local competitors.

Read more: Germany and China — trade partners and competitors

JD.com has been investing heavily in logistics services as it looks to move beyond its Chinese base, including the development of a logistics center in France: Liu said the company wants to become "strategic partners" with delivery companies such as DHL or UPS, with the aim of using their own artificial intelligence delivery services within Europe.

Sino-German angst

The JD.com plans to move into the German market come at a time of heightened economic tensions between the Chinese and the EU's most powerful economy.

While the US-China dimension has commanded most of the headlines in this ongoing spell of trade tensions, plenty of discontent has been brewing on the subject between Germany and China.

As well as that, Germany has become wary of the flow of Chinese money into the country following some sensitive takeovers, with investment attempts closely scrutinized and audited, leading to a fall in Chinese investment in Europe in 2017.

Liu played down these concerns and said that the European market should be open to Chinese companies such as his. "Restrictions on investments are the wrong way," he said. "Europe should be open. Every country should be open. China is the most important market for German cars. This benefits both sides."

Although no formal move has yet been made by JD.com in terms of its prospective move into Europe, German business observers will now be watching out for the moment when the Chinese businessman's words are made flesh to see just how a big deal it really is.

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