It’s a wrap? China-based e-commerce giant JD.com retreats from SEA
- JD.com is closing its e-commerce services in Indonesia and Thailand, marking an end to its presence in this region after a bruising year for China’s retail and tech sector.
- The Beijing-based company has faced stiff competition from longtime rival Alibaba, which operates Lazada in Southeast Asia, TikTok, and Indonesia’s Tokopedia.
In the final quarter of 2022, news on JD.com, possibly exiting its joint e-commerce ventures in Thailand and Indonesia by the first quarter of this year, was making its rounds. In a statement on the company’s blog this week, JD.com confirms the news and reiterates that its operations in both countries will begin to cease in March this year. The move would also mean that the online retailer will finally shut down its business in the Southeast Asian region after struggling to stay afloat in a highly-competitive space.
The moves also mean JD.com is shifting its overseas strategy toward supply-chain and logistics services. According to statements on the businesses’ websites, JD.ID in Indonesia will stop accepting orders from mid-February, and all services will be stopped by the end of March, while JD Central in Thailand will cease its operations from March 3, 2023.
As Alibaba Group Holding Ltd.’s biggest rival, JD.com intends to pivot its international businesses toward supply-chain management and warehousing services, a move seen as a way to curb spending amidst slowing growth. According to a report by Bloomberg, JD.com’s email confirms the groups’ change in direction: “JD.com will continue to serve the global markets, including Southeast Asia, through its supply chain infrastructure.”
“We are developing in international markets by focusing on building a cross-border supply chain network with logistics and warehousing at the core,” the group added. To recall, JD.com launched its Indonesia operations in 2015, and three years later, it invested in Gojek as part of its Southeast Asia push. Following the investment, according to local reports, JD.ID’s valuation exceeded US$1 billion, turning it into the country’s fifth-largest unicorn.
Then, between 2017 to 2018, JD.com invested in Indonesia’s Tokopedia, Vietnam’s Tiki, India’s ShadowFax, and Thailand’s JD Central. The online retailer also introduced its unmanned store tech in Indonesia in 2018, marking the first time it has done so overseas. JD.com also opened an AI-powered experience store, JD.ID X-Mart, in Jakarta that same year, allowed consumers to pick up whatever they wanted and walk straight out of the store without getting slowed down by lines or payments.
To recall, the closure of its Southeast Asian business comes shortly after JD.com was reported to be slashing salaries for around 2,000 executives by 10% to 20% and diverting some of the savings to a raft of employee benefits from next year. CEO Liu Qiangdong sent a letter to his staff about the decision where he apologized for reducing some of the managers’ pay and promised to restore it if JD.com could return to fast growth in the next two years, according to The Wall Street Journal.
The salary cuts at JD.com follow a wave of job and cost reductions worldwide by companies struggling with a potential recession. The Chinese firm, which like Alibaba, weathered two years of strict Covid controls that precipitated a downturn, last year reported an 11% rise in its third-quarter revenue. It is also fair to say that JD.com is riding out the slowdown better than Alibaba, the target of a bruising antitrust crackdown in 2021.
As JD.com leaves the region, the e-commerce industry could now see increased growth for its competitors, especially Tokopedia, which is also a local player in Indonesia.