Chinese firm JD.com plans to pull out of major Southeast Asian markets, reports Chinese media Xiaguangshe. The Giantecommerce seeks to reduce its losses in secondary regions to strengthen its activities in its national market. The first countries affected would be Indonesia and Thailand.
JD.com takes a 180 degree turn in its expansion
JD.com’s expansion into the Southeast Asian market has cost the company more than $1.39 billion over the past eight years. The decision to withdraw from Indonesia and Thailand reflects the slowing growth of e-commerce in these markets, particularly caused by rising prices. Market experts in Southeast Asia say consumers in those regions are being forced to cut back on electronics in the face of inflation. In the countries concerned, the prices of fuels and imported products have exploded with the recent shortages.
Before considering withdrawing, JD.com had tried to raise the bar at the start of the year. The e-commerce juggernaut had ordered its Indonesian subsidiary to lay off more than 200 people and froze hiring according to a testimony relayed speak South China Morning Post. According to the same person, the stagnation of JD.com’s sales is due to ineffective advertising campaigns during the Covid-19 pandemic and a clumsy view of deliveries in these countries, drawing too much inspiration from China.
The company recently sought an investor to take over its stake in JD.ID, an Indonesian joint venture it formed in 2015 with Singapore-based private equity firm Provident Capital Partners. In the meantime, the subsidiary is concentrating on the recovery of cash and making substantial efforts to achieve positive margins.
For Thailand, the parent company of JD.com has tried several times, without success, to withdraw from the company JD Central which it created with the trade and real estate development conglomerate Central Group, based in Bangkok. The Thai subsidiary has been losing money since its launch. According to documents published by the Thai government, the losses of the JD.com group are around 130 million euros between 2017 and 2021.
Overall, the e-commerce giant reported in its financial statement on November 18 a net profit of 800 million euros in the third quarter, rebounding from a loss of 380 million euros, at the same time. period, last year. This revival is due to the increased efficiency of its various activities. Turnover reached 32 billion euros, an increase of 11.4% compared to the previous year. The concordance between the sale of the subsidiaries and the best results occurs in a context of organizational overhaul within the group’s activity. Group CEO and Founder Richard Liu Quiangdong wants to go back to basics by offering lower priced items and better service.
In recent years, Chinese companies have shown an interest in expanding abroad. Giants like Alibaba, a major competitor of JD.com, felt narrow in the domestic market. For JD.com, this attempt is a failure, at least towards Southeast Asia.
