E-commerce giant JD.com joins forces with China Eastern

JD.com, China’s largest online retailer by revenue, announced on June 26 that it had entered a strategic agreement with China Eastern Air Holding Co to cooperate on a variety of matters including aviation logistics, passenger airline business, branding promotion and enterprise procurement.

China Eastern Air Holding Co is the parent company of listed China Eastern Airlines Corp Ltd. The group, which owns a fleet of more than 640 aircraft, is one of the country’s top three airlines as well as the world’s seventh largest carrier.

The Shanghai-based airline handled 101.7 million passenger trips in 2016 and has a network comprising 1,062 destinations in 177 nations.

Chinese e-commerce giant JD owns the nation’s largest logistics facilities and network among all domestic e-commerce operators. As of March, the company operates seven logistics hubs and 263 large warehouses across China.

“The cooperation is due to the fact that both parties are looking to enhance their competitiveness in their respective industries, especially amid the nation’s ever-growing e-commerce development,” said Li Lei, an industrial analyst with Minzu Securities.

According to the agreement, China Eastern will offer cargo delivery, shipping and related value-added services to JD. The airline will also assist JD in its construction of an aviation hub, warehouse operations. Meanwhile, the e-commerce operator will offer delivery services for the airline’s tickets, membership cards, aviation schedules and receipts.

The two sides will also share their logistics resources to build a green channel for processing security checks and delivery, as well as a global network to enhance air logistics efficiency.

For China Eastern Airlines, the cooperation with JD, which came a week after it unveiled the restructuring plan for its logistics business, will help strengthen its cargo business, added Li.

On June 19, the State-owned China Eastern Air Holding Co announced that its logistics arm Eastern Air Logistics Co had found four strategic investors who would purchase a 45 percent stake in its freight business.

“From JD’s perspective, the partnership with China Eastern will give it a great growth prospect considering the carrier’s influence in surrounding areas and Shanghai’s e-commerce logistics development potential,” said Li.

Cooperation between the two has already begun. More than 10 JD cargo flights in Beijing and Shanghai are operated by China Eastern, and experts forecast such flights to exceed 20 in the second half of this year.

According to Wang Zhenhui, CEO of JD Logistics, the company spun off its logistics service in April because it wanted to construct a smart supply chain network covering logistics, e-commerce, finance, insurance, data as well as technology.

Wang added that this network will help all the partners along the industrial chain to lower supply chain costs and enhance logistics efficiency.

PROVIDED TO CHINA DAILY JD.com CEO Liu Qiangdong (left) and China Eastern Chairman Liu Shaoyong at the signing ceremony.