JD.com Invests In Tiki.vn, Boosts Southeast Asia Presence
Zacks Investment Research | Jan 16, 2018 08:54PM ET
Chinese e-Commerce company, JD.com Inc. (NASDAQ:JD) has agreed to invest in Vietnamese e-commerce firm Tiki.vn.
The investment will expand JD.com’s presence in Southeast Asia and also fend off further competition from Alibaba Group Holding Ltd (NYSE:BABA) and Amazon.com Inc (NASDAQ:AMZN) . However, the amount of the funding has not been disclosed.
Following the deal, JD.com is likely to become one of Tiki's largest shareholders alongside VNG, China's second-biggest e-commerce firm behind Alibaba and an existing investor in Tiki.vn.
We note that JD.com has had an impressive run on the bourse in the past year. The stock has gained 70.7% compared with the industry ’s growth of 61.9%.
We expect international expansion to back the momentum going forward.
Why Vietnam?
Historically, Southeast Asian countries have attracted investors from across the globe, thanks to solid growth rates, booming populations and generally good governance. In fact, Southeast Asia has started attracting attention due to increasing growth of internet services.
With this recent investment, JD.com will increase its presence in a nascent but populous online retailing market. According to a 2016 report, co-authored by Google (NASDAQ:GOOGL), e-commerce in Southeast Asia is on track to grow and reach $88 billion by 2025 from $5.5 billion in 2015.
JD.com has been making efforts to expand its presence outside China. In doing so, the company had launched a local online retail business in Indonesia two years ago and now claims to be the country' largest retailer by revenues. Additionally, it formed a $500 million e-commerce venture with Thai retailer Central Group.
Also, the latest move will help JD.com to fight competition from Alibaba and Amazon. Both the companies have made significant investments in the past year in Souteast Asia. Alibaba invested in payment and e-commerce ventures in Thailand, Singapore, Indonesia and Malaysia. On the other hand, Amazon also launched its subscription-based Prime service in Singapore last month in a bid to challenge Alibaba-backed online retailer Lazada Group in Southeast Asia.
JD.com, Inc. Price and Consensus
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