Google Invests $550 Million in Chinese Online Shopping Site JD.com

By Liza Lin 

SHANGHAI-- Alphabet Inc.'s Google unit is investing $550 million in Chinese e-commerce retailer JD.com Inc., a move that will deepen its ties with China and strengthen its foothold in online shopping.

The partnership will help both companies expand their retailing presence in Southeast Asia, the U.S. and Europe, working jointly on retail and infrastructure systems to help brick-and-mortar merchants go digital.

Under the deal announced Monday, Google bought about 27 million newly issued shares of Nasdaq-listed JD.com at $40.58 apiece, a pricing based on the volume-weighted average trading price over the last 10 days. The deal will put Google's stake in JD.com at about 1%, according to a JD spokesperson.

JD will start selling products on Google Shopping, helping it reach consumers in the U.S. and Europe as it seeks to diversify beyond China's highly competitive e-commerce market.

The deal will help Google to expand its online retailing business and could boost advertising revenue, which has been threatened by Amazon.com Inc. recently as businesses increasingly shift ads to the internet shopping company.

The JD investment comes as Google seeks to strengthen its connections in China. Its search engine has been blocked here since 2010, when the company refused to censor content. However, it still maintains a sizable presence in the country, with three offices locally employing more than 600 staff, mostly engaged in ad sales and engineering.

Over the past two years, the Mountain View, CA-based company has sought to improve relations and expand its presence in China. Senior executives including Chief Executive Sundar Pichai have made two trips in the last seven months, meeting lawmakers and industry academics in two high-profile conferences organized by the Chinese.

In December, Google launched an artificial intelligence lab in Beijing to tap the growing market for AI talent. Most recently, it introduced the Files Go app in China, a digital file storage application for emerging-market consumers.

Beijing-based JD, which counts Walmart Inc. and Tencent Holdings among its shareholders, has struggled to gain market share from industry leader Alibaba Group Holding in China's online shopping market.

JD held about 25% of China's business-to-consumer internet retail market share in the first quarter of 2018, behind Alibaba's Tmall platform, which held a 60% share, according to industry researcher Analysys. JD's market share was lower than a year ago, when the firm held almost 27% of the market, Analysys data shows.

Write to Liza Lin at [e-mail]

(END) Dow Jones Newswires

June 18, 2018 04:35 ET (08:35 GMT)

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