(FinancialPress) — Google‘s ongoing presence expansion in China just took a huge leap upward, as it revealed a strategic partnership with regional e-commerce platform JD.com. Google will acquire $550 million in JD shares, both companies revealed.
Google has been steadily laying the foundation for a full-fledged China operation. So far, it has opened offices there (such as an AI development unit) and has released products in the region. However, the JD.com alliance will operate mostly outside of Chinese soil. A joint statement by both companies pinpoints their goal as being to “collaborate on a range of strategic initiatives, including joint development of retail solutions” in North America, Europe and Southeast Asia.
JD.com‘s expertise in supply chains and logistics encompasses decades of experience and technology to boot. In China, the company owns warehouses that are operated mostly by robots over workers. When combined with Google‘s marketing, data processing and customer reach muscle, we could very well be seeing the first steps towards a new kind of online retail.
The partnership will begin with JD.com products being offered in the Google Shopping platform for customers around the world. However, the megacompanies likely have much more complex collaborations in mind.
JD.com‘s NASDAQ valuation stands at approximately $60 billion. It boasts partnerships with companies such as Walmart and is considered an innovator in the retail and logistics sector. Most notably, the Chinese company is renowned for its efforts in warehouse technology automation, drone delivery and other “next-gen“ angles in its sector.
Partnering with rivals
Google‘s eagerness to get behind a service provider such as JD.com is worthy of note, as the former holds business relations with the latter‘s retail arch rival – Alibaba.
This is not the first time the companies have been involved in a joint venture. Both of them, joined by $500 billion Chinese internet giant Tencent, backed Southeast Asia‘s answer to Uber – Go-Jek. Tencent and Google also have an ongoing patent sharing agreement and also have a number of joint investments such as the one made in XtalPi, a Chinese AI startup.