JD.COM EYES EXIT FROM SE ASIAN MARKETS
E-commerce giant’s retreat from Thailand and Indonesia is aimed at cutting losses and bolstering operations at home, sources say
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 intended to pull back from its businesses in Indonesia and Thailand, where sales growth had 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 it formed in 2015 with Singaporeheadquartered private equity firm Provident Capital Partners, according to three people close to the Indonesian e-commerce platform.
It has also been seeking to exit from Thai joint venture JD Central, which was formed in 2017 with Bangkok-based retail and property conglomerate Central Group.
News of JD.com’s efforts to pull out from these two joint ventures were initially reported by mainland media Xiaguangshe, citing sources who said the company’s expansion in Indonesia and Thailand had cost it more than 10 billion yuan (HK$10.8 billion) over the past eight years.
JD.com, Provident Capital and Central Group did not immediately respond to requests for comment yesterday.
Shares of JD.com closed up 10.89 per cent at HK$210.80 yesterday.
The company’s decision reflects slowing e-commerce growth in Indonesia and Thailand, partially caused by the increased cost of living.
Consumers across Southeast Asia have tightened their purse strings, according to Li Jianggan, founder and chief executive of Singapore-based venture firm and tech consultancy Momentum Works.
He said the strong US dollar had hurt local currencies across the region, which had 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 an 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 venture was now focused on fixing its cash flow and working towards achieving positive margins, the employee said.
JD Central, meanwhile, has been losing money since it was launched. JD.com’s losses in this venture amounted to about 1 billion yuan between 2017 and 2021, according to Thai government filings.
Central Group even called back some of its executives in the venture in 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 based on the latest e-commerce traffic data this year tracked by research firm iPrice.
Both platforms, however, ranked behind Singapore e-commerce giant Shopee and Lazada Group, a unit of Alibaba Group Holding, which owns the Post.
JD.ID did not fare well in the iPrice rankings from Indonesia either, where traffic was led by Shopee, Lazada, Tokopedia, Bilibili and Bukalapak.
Efforts by JD.com to shed its loss-making business units in Southeast Asia come at a time when founder Richard Liu Qiangdong has pursued organisational changes at the group’s core JD Retail business.