JD.com May Withdraw from Indonesia and Thailand to Focus on China

Chinese e-commerce giant JD.com is considering pulling back from key markets in Southeast Asia in an effort to reduce losses in the area and strengthen operations at home.

According to sources of South China Morning Post (SCMP), Beijing-based JD.com plans to draw back from its operations in Indonesia and Thailand, where sales development has been difficult for many years.

Exit Plans

Three individuals familiar with the case of the Indonesian e-commerce platform said the business has been searching for an investor to buy out its stake in JD.ID joint venture it founded in 2015 with the Singapore-based private equity firm Provident Capital Partners. 

It has also been trying to get out of its 2017 Thai joint venture with the retail and property development powerhouse Central Group in Bangkok.

Chinese news outlet Xiaguangshe was the first to report on JD.com’s plans to exit its two Southeast Asian joint ventures. It cited unnamed sources who said that the company’s development in the two regions had cost it more than ¥10 billion ($1.39 billion) during the last eight years.

The rising cost of living in Indonesia and Thailand is a contributing factor to the company’s decision to pull out of those markets.

In Indonesia

Southeast Asian consumers have tightened their wallets, says Jianggan Li, CEO of Singapore-based consulting firm Momentum Works. The strong US dollar has damaged local currencies throughout the area, causing price spikes on imported items and petrol.

Allegedly, this has led JD.ID had already laid off over 200 individuals this year to reduce costs and halt new hires.

SCMP reported that an employee who requested anonymity said that numerous choices were made based on China market norms, which did not necessarily work locally in Indonesia. This included the company’s ineffective advertisements during the Covid-19 outbreak, especially when reports, including Tech Time’s, pointed out the country as the Covid epicenter in Asia in 2021. 

Apparently, such moves contributed to JD.ID’s sluggish sales. 

The employee said that the Indonesian partnership’s current priorities are to improve cash flow and increase profitability.

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In Thailand

Similarly, JD Central has been a money drain ever since it was founded. Thai government papers show JD.com lost ¥1 billion ($139 million) in this joint venture between 2017 and 2021.

In the midst of JD Central’s continued underperformance, the Central Group reportedly pulled several of its leaders back in the middle of this year.

JD.ID scored poorly in Indonesia’s iPrice rankings, while Sea-owned Shopee, Lazada, Tokopedia, Bilibili, and Bukalapak led.

In China

JD.com has now become one of the country’s biggest e-commerce platforms in China. 

Its efforts to eliminate its loss-making business divisions in Southeast Asia come as firm founder Richard Liu Qiangdong pushes the Chinese online platform to go back to fundamentals, such as cheap costs and outstanding service.

JD.com reported a ¥6 billion ($838 million) net income in the third quarter, recovering from a ¥2.8 billion ($391 million) loss last year. Revenue rose 11.4% to ¥243.5 billion ($34 billion).

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Written by Tech Times writer Trisha Kae Andrada

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