Chinese e-commerce giant JD.Com Inc(ADR) (NASDAQ:JD) is currently in talks with Central Group, a Thai firm, with a view to getting into an online retail joint venture in Thailand. The planned total amount for the investment is estimated to be $500 million.
The JV will assist the second biggest online retailer in China extend its footprint which is currently restricted to its domestic market and Indonesia, where JD.com runs Traveloka, a travel startup and an ecommerce platform. By getting into Thailand, JD.com will have an opportunity to boost its Southeast Asian presence and battle it out with competitors such Amazon and Alibaba.
Servicing hub
The second largest retailer in China, which intends to venture into the Thai market before the end of the year, plans to use the country as a hub that will be critical in servicing the region including countries such as Malaysia and Vietnam. It is expected that besides e-commerce JD.com’s joint venture with the Chirathivat family-owned Central Group will concentrate on the financial sectors. According to sources what is currently holding back the deal are disagreements on ownership terms.
This joint venture with JD.com will not be the first time that Central Group is trying to penetrate Thailand’s fast-growing online retail industry. Last year the group acquired Zalora’s Thai unit. Zalora is an online fashion retailer. The value of the e-commerce market in Thailand is currently estimated to be $900 million.
Lucrative market
In the next decade it is expected to expand by 29% according to a Temsek and Google report. Some of the players in Thailand’s e-commerce sector include 11 Street from South Korea; Ascend, a unit of Thailand’s CP Group and Lazada which is backed by Chinese online retail giant, Alibaba.
Temsek and Google also estimated that by 2025 the size of the Southeast Asian e-commerce market will have grown 16-fold to reach a figure of $88 billion. The size of the population in the region is currently estimated to be 600 million people.
On Wednesday the stock price of JD.com rose by 0.69% to close the day at $42.44 per share.