Chinese online retailer JD.com raises US$2.5 billion for logistics arm in latest round of funding

JD.com announced on Wednesday that it has raised US$2.5 billion in the latest funding round for its subsidiary JD Logistics and it comes at a time when China’s second largest online retailer is looking to build its logistics network and expand globally.

“This financing will enable JD Logistics to further enhance its smart supply chain network with openness and integration,” said Wang Zhenhui, chief executive officer of JD Logistics. “It is a major step, which will speed up our collaborative efforts with leading industry partners and build China’s next-generation commercial infrastructure ecosystem.”

The funding values JD Logistics at US$10.9 billion, which was led by investment firms Hillhouse Capital Group and Sequoia Capital China, internet giant Tencent Holdings and also included state-owned companies such as China Merchants Group, China Life, China Development Bank Capital, China Structural Reform Fund and ICBC International, the company said.

The Beijing-based e-commerce player will remain the majority shareholder of JD Logistics with an 81.4 per cent stake after the completion of this transaction, which is expected to be completed by the end of this quarter.

JD.com established JD Logistics as a stand-alone subsidiary in April 2017 and hopes to spin off the logistics business at some stage in the future through an initial public offering overseas.

“This current funding round sets the stage for us to further invest in expanding our lead in the sector in areas like automation, drones and robotics,” said Richard Liu, chairman and chief executive officer of JD.com. “JD Logistics will continue to support both JD.com’s e-commerce business and the logistical needs for a wide range of industries for years to come.”

On the mainland, JD.com plans to expand its networks and use of technology with this capital infusion. In 2017, the company operated seven fulfilment centres and 405 warehouses covering 2,830 counties and districts across China, staffed by its own employees.

JD.com also has its own smart warehouse where only robots operate. Last May, the company launched JD-X, a logistics lab to develop robots, drones and smart warehouses. In August, it offered 100 million yuan (US$15.7 million) to the winners of a competition to find the best solution for conducting widespread drone delivery services across China.

Overseas, it has invested in logistics infrastructure in South East Asia and entered into a tie-up with Japanese delivery firm Yamato Holdings last December.