Google will invest $550 million in Chinese e-commerce powerhouse JD.com, part of the U.S. internet giant’s efforts to expand its presence in fast-growing Asian markets and battle rivals including Amazon.com, Reuters reports.
The two companies described the investment announced on Monday as one piece of a broader partnership that will include the promotion of JD.com products on Google’s shopping service. This could help JD.com expand beyond its base in China and Southeast Asia and establish a meaningful presence in U.S. and European markets.
JD.com’s U.S.-listed shares rose 1.2 percent to $44.10 on the Nasdaq on Monday.
JD.com’s investors include Chinese social media powerhouse Tencent Holdings Ltd, the arch-rival of Chinese e-commerce leader Alibaba Group Holding Ltd, and Walmart Inc.
“Given Walmart also has a close relationship with JD, I see (the investment) as further tightening of the Google/Walmart alliance, which seems focused on building a third force in ecommerce beyond Amazon and Alibaba,” Atlantic Equities analyst James Cordwell was quoted as saying by Reuters.
Google is stepping up its investments across Asia, where a rapidly growing middle class and a lack of infrastructure in retail, finance and other areas have made it a battleground for U.S. and Chinese internet giants. Google recently took a stake in Indonesian ride-hailing firm Go-Jek, and sources have told Reuters that it may also invest in Indian e-commerce upstart Flipkart.
Google declined to comment on the rumored Flipkart deal. The JD.com investment is being made by the operating unit of Google rather than one of parent company Alphabet’s investment vehicles.
Google will get 27.1 million newly issued JD.com Class A ordinary shares as part of the deal. This will give them less than a 1 percent stake in JD, a spokesman for JD said.
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