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    Chinese e-commerce giant JD.com eyes retreat from Southeast Asian markets Indonesia, Thailand to sharpen focus on home market

    china23

    Ben Jiang in Beijing
    JD.com is pondering a retreat from major markets in Southeast Asia, as the Chinese e-commerce giant sharpens its focus on cutting losses in the region and bolstering operations in its home market, according to people familiar with the matter.

    Beijing-based JD.com intends to pull back from its businesses in Indonesia and Thailand, where sales growth has been a challenge for several years, the sources said.

    The company has been looking for an investor to take over its interest in JD.ID, a joint venture that it formed in 2015 with Singapore-headquartered private equity firm Provident Capital Partners, according to three people close to the Indonesian e-commerce platform.

    It has also been working to exit from Thai joint venture JD Central, which was formed in 2017 with Bangkok-based retail and property development conglomerate Central Group.

    News of JD.com’s efforts to pull out from those two Southeast Asian joint ventures were initially reported by Chinese media Xiaguangshe, citing sources who said the company’s expansion in the two markets had cost it more than 10 billion yuan (US$1.39 billion) over the past eight years.

    JD.com, Provident Capital and Central Group did not immediately respond to requests for comment on Tuesday.

    Shares of JD.com in Hong Kong were up 10.89 per cent to HK$210.80 at the close of trading on Tuesday.

    The company’s decision to withdraw from Indonesia and Thailand reflects slowing e-commerce growth in these markets, partially caused by the increased cost of living.

    Consumers across Southeast Asia have tightened their purse strings, according to Jianggan Li, founder and chief executive of Singapore-based venture firm and tech consultancy Momentum Works. He said the strong US dollar has hurt local currencies across the region, which has led to price increases on imported products and fuel.

    That has prompted JD.ID, which laid off more than 200 people earlier this year, to keep expenses down and freeze hiring, according to an employee who requested anonymity because the situation is sensitive.

    JD.com’s decision to withdraw from Indonesia and Thailand reflects slowing e-commerce growth in these markets. Photo: Shutterstock

    JD.com is pondering a retreat from major markets in Southeast Asia, as the Chinese e-commerce giant sharpens its focus on cutting losses in the region and bolstering operations in its home market, according to people familiar with the matter.

    Beijing-based JD.com intends to pull back from its businesses in Indonesia and Thailand, where sales growth has been a challenge for several years, the sources said.

    The company has been looking for an investor to take over its interest in JD.ID, a joint venture that it formed in 2015 with Singapore-headquartered private equity firm Provident Capital Partners, according to three people close to the Indonesian e-commerce platform.

    It has also been working to exit from Thai joint venture JD Central, which was formed in 2017 with Bangkok-based retail and property development conglomerate Central Group.

    A worker sorts packages for delivery at a JD.com warehouse in Beijing on September 8, 2022. Photo: Agence France-Presse

    News of JD.com’s efforts to pull out from those two Southeast Asian joint ventures were initially reported by Chinese media Xiaguangshe, citing sources who said the company’s expansion in the two markets had cost it more than 10 billion yuan (US$1.39 billion) over the past eight years.

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    JD.com, Provident Capital and Central Group did not immediately respond to requests for comment on Tuesday.

    Shares of JD.com in Hong Kong were up 10.89 per cent to HK$210.80 at the close of trading on Tuesday.

    The company’s decision to withdraw from Indonesia and Thailand reflects slowing e-commerce growth in these markets, partially caused by the increased cost of living.

    Founder Richard Liu urges JD.com to cut prices amid tough retail sector25 Nov 2022

    Consumers across Southeast Asia have tightened their purse strings, according to Jianggan Li, founder and chief executive of Singapore-based venture firm and tech consultancy Momentum Works. He said the strong US dollar has hurt local currencies across the region, which has led to price increases on imported products and fuel.

    That has prompted JD.ID, which laid off more than 200 people earlier this year, to keep expenses down and freeze hiring, according to an employee who requested anonymity because the situation is sensitive.

    JD.ID’s stagnant sales were the result of a combination of factors, including inefficient campaigns during the Covid-19 pandemic and inept approach to localisation, according to the employee, who said many decisions were based on China market practices that did not always work locally.

    The Indonesia joint venture is now focused on fixing its cash flow and work towards achieving positive margins, the employee said.

    JD Central, meanwhile, has been losing money since it was launched. JD.com’s losses in this joint venture amounted to about 1 billion yuan between 2017 and 2021, according to Thai government filings.

    The Central Group even called back some of its executives in the venture during the middle of this year, according to Thai media reports at the time, amid JD Central’s failure to improve its performance.

    The group’s own Thai internet shopping platform, Central Online, ranked higher than JD Central in terms of this year’s latest e-commerce services traffic data tracked by market research firm iPrice. Those two platforms, however, ranked significantly behind Singapore e-commerce giant Shopee and Lazada Group, a subsidiary of South China Morning Post owner Alibaba Group Holding.

    JD.ID did not fare well in the iPrice rankings from Indonesia, where traffic was led by Sea-owned Shopee, Lazada, TokopediaBilibili and Bukalapak.

    Efforts by JD.com to to shed its loss-making business units in Southeast Asia come at a time when company founder Richard Liu Qiangdong has pursued organisational changes at the group’s core JD Retail business, while pushing the Chinese online platform to get back to basics, such as low prices and quality service.

    JD.com reported a 6 billion yuan net income in the third quarter, rebounding from a 2.8 billion yuan loss in the same period last year, on the back of increased efficiency across its various businesses. Revenue totalled 243.5 billion yuan, up 11.4 per cent from a year earlier.