China’s JD.com expands operations to Silicon Valley

Chinese e-commerce operator creates research facility in Santa Clara, California

PUBLISHED : Tuesday, 13 October, 2015, 8:44am
UPDATED : Tuesday, 13 October, 2015, 4:26pm

JD.com, China’s second-largest e-commerce services provider by sales, has expanded its operations in the United States, with the opening on Monday of a research and development facility in Santa Clara, California — right in the centre of Silicon Valley.

“Given the scope and strength of American brands, products and capabilities, the US was the obvious choice as we sought a location for our first office outside of Asia,” said Richard Liu Qiangdong, the founder and chief executive of JD.

The move followed JD’s unveiling last month of a new office in Hong Kong that was set up to help the Beijing-based company better engage with major brands and retailers across Asia.

Dennis Weng, the chief technical advisor for JD Mall, has been tasked to initially oversee the new US facility, which will focus on areas such as cloud computing, mobile applications and big-data infrastructure to improve the online retail experience for its customers in mainland China and boost the company’s US-sourced offerings.

JD’s research and development operation is also expected to provide both rotational job possibilities for engineers in China and opportunities for certain skilled technical workers in Silicon Valley.

“Our nearly 120 million active customers stay loyal because they know we work continuously to improve their shopping and fulfillment experience by implementing the most advanced technologies and processes,” said Rain Long, JD’s chief human resources officer and general counsel.

Nasdaq-listed JD launched a “US Mall” marketplace on its website, dedicated exclusively to meeting the demand on the mainland for authentic imported American products.

“As we build out and staff our new facility in the coming months we look forward to forging new partnerships and attracting new talent that will help JD.com achieve its goals of delivering an unparalleled level of service and quality,” Long said.

JD, which posted second-quarter revenue of 45.9 billion yuan (US$7.2 billion), claims it has the largest fulfilment infrastructure of any e-commerce company in mainland China.

It operates seven so-called fulfilment centres and a total of 166 warehouses in 44 cities. In addition, its own staff runs 4,142 delivery stations and pick-up stations in 2,043 counties and districts across the country.

Efforts to widen JD’s international sourcing capabilities are in line with the company’s announcement in August of expanding into 100,000 villages across mainland China by the end of this year. This marks the company’s most aggressive domestic market expansion since 2013, when it started its foray into lower-tier cities..

“Management expects to see more than 50 per cent order contribution from lower-tier cities in the near term,” Jefferies equity analyst Cynthia Meng said in a report.

Meng said the fastest-growing product categories on business-to-consumer e-commerce platform JD Mall included apparel and shoes, home furnishing, watches, food and beverage, cosmetics and baby products.

JD’s rural expansion would heat up competition with domestic market leader Tmall.com, e-commerce giant Alibaba Group’s business-to-consumer operation, in that fast-growing market segment.

The number of online shoppers in rural mainland China increased 40.6 per cent year-on-year to 77.14 million at the end of December, according to data from the China Internet Network Information Centre.