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US$2.5 Billion Raised By Chinese Online Retailer JD.Com For Expansion Of Its Logistics Arm In A Funding Round


02/15/2018


US$2.5 Billion Raised By Chinese Online Retailer JD.Com For Expansion Of Its Logistics Arm In A Funding Round
While attempting to develop its own logistics network and engage in global expansion, about US$2.5 billion was raised in a latest funding round by Chinese online retailer JD.com. the money has been raised for JD Logistics, the logistics arm of the second largest online retailer of China, the company announced after the fund raising. 
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“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.”
 
There were a number of investors including state-owned companies such as China Merchants Group, China Life, China Development Bank Capital, China Structural Reform Fund and ICBC International and private companies like investment firms Hillhouse Capital Group and Sequoia Capital China, internet giant Tencent Holdings who took part in the funding round which valued JD Logistics at US$10.9 billion.
 
It is expected that the transaction would get completed by the end of the current quarter following which the Beijing-based e-commerce company would still hold 81.4 per cent stake in JD Logistics and be the majority shareholder.
 
JD.com plans to spin off JD Logistics through an initial public offering overseas in the near future. The company was created in April of 2017 as a stand-alone subsidiary of JD.com.
 
“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.”
 
There are plans to put the money available from the latest funding round for development of technology for JD logistics in addition to undertaking an expansion of the company network in mainland China. There are 405 warehouses of JD Logistics which cover 2,830 counties and districts across China while the company operated seven fulfillment centers in 2017. The company has its own staff top support its activities.
 
There are some smart warehouses owned and operated by JD.com where only robots do the job. The development of robots, drones and smart warehouses is done by the company itself in a logistics lab called JD-X which was launched by the company in May 2017. A competition was held by the company in August of last year within the wider population and offered a reward of 100 million yuan (US$15.7 million) to anyone who would be able to provide the best solution to take care of the plans of the company to conduct widespread delivery through drone services all across China.
 
The company has also inked a tie-up with Japanese delivery firm Yamato Holdings last December and has made some significant investments in logistics infrastructure in South East Asia.
 
(Source:www.scmp)