ASIA: Behind the Ticker – You’ve heard of DJ’s, but what about JD.com?

ASIA: Behind the Ticker – You’ve heard of DJ’s, but what about JD.com?

BY Justin Arzadon | 17 April 2019
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Jdcom drone-640x360

Quick read: 3 minutes

JD.com aka Jingdong could be the biggest company you’ve never heard of.

The company started as a small bricks and mortar store in Bejing in 1998 and moved online in 2004. It now provides over 314 million active customers in China with direct access to an unrivalled range of authentic high-quality products, and helps leading local and international brands tap into China’s fast-growing e-commerce market.

Its vast product offering covers everything from fresh food and apparel to electronics and cosmetics, which it delivers same- and next-day as standard – a level of service and speed unmatched globally.

The ‘Amazon of China’

JD.com currently employs 150,000 workers and is worth around US$40 billion. Its revenues, which sat at US$67 billion at the end of 2018, are expected to grow by 20% in 2019.

It is China’s largest online retailer, and claims to be the third largest internet company in the world by revenue, placing it after Google and Amazon, but ahead of companies like Facebook, eBay and Alibaba, its bigger (and better-known) rival.

Because JD takes on inventory risk, it has been able to achieve procurement scale over time, and guarantee product quality in a country rampant with fake goods. Moreover, by operating logistics in-house – something Alibaba is reluctant to do – JD can deliver goods far faster than the status quo.

Automation

The company has started to automate everything that can sensibly be automated. Robots at JD are everywhere, with autonomous forklift trucks and other machines stacking tens of thousands of products on shelves, and packing and shipping hundreds of thousands of items a day.

In 2013, Amazon boss Jeff Bezos claimed that his firm would soon drop parcels off at your doorstep.  Some small-scale trials aside, this has still not eventuated. But it’s very much happening at JD – since March 2016 its drones have been delivering products across China, having clocked over 300,000 minutes of flight time. The drones are part of a whirring fleet intended to cut JD’s delivery expenses by more than half over the next few years.

jingdong's unmanned express vehicle

Source: Jd.com

The drone efforts haven’t gone unnoticed, and other companies, keen to replicate JD’s air delivery success, have been getting in touch to buy their drones.

The company is now busy developing larger drones capable of transferring inventory from one warehouse to another.

Scale

JD has started its push into Western markets with drones, robots and luxury brands:

  • It has major backers such as Tencent (the largest internet company in China and owner of WeChat), Walmart, which holds a 10% stake, and Google, which plans to invest $550 million into JD to help it expand further outside China.
  • In January, JD opened its first European office in Paris. It aims to open another one in Milan, and is partnering with Spanish and other European brands – especially luxury ones.
  • In October 2017 it launched Toplife, a platform for luxury buyers. In just a few months, Toplife has already signed up 20 brands, including Saint Laurent and Alexander McQueen.

How to gain exposure to JD.com and other exciting Asian Technology companies

China has transformed into a technology-driven, consumption-based economy, which should continue to fuel innovation and growth within Asian tech. To gain cost-effective exposure to a diversified portfolio of the largest technology companies based in Asia (ex Japan), including JD.com, Baidu (which owns China’s dominant search engine), Alibaba and Tencent, you may want to consider the BetaShares Asia Technology Tigers ETF (ASX: ASIA).

ASIA, which can be bought in a single trade on the ASX, can provide a complement for investors who already have an allocation to U.S. based tech companies, and can also be a core component of a global equities allocation.


Note: An investment in the ASIA ETF involves risk.  No assurance is given that any companies discussed above will provide positive returns.  See the PDS for more information about risks.
Image source: Jd.com, qz.com

2 Comments

  1. Bill Abram  |  April 17, 2019

    I all read have ASX ; ASIA- I will get some more if you can let me know what percentage you have in JD.com?

    Thanking you
    Regards
    Bill

    1. Gavin Montgomery  |  April 17, 2019

      Hi Bill,

      JD.com currently represents 3.4% of the underlying holdings in ASIA. The purpose of these articles is to pop the hood and give investors a glimpse of some of the companies that make up our ETF’s and how they add a compelling benefit to the themes they represent. If you have more interest in some of ASIA’s top holdings please check out the below link.

      Asia Technology Tigers ETF – Company Profiles

      Kind Regards,
      BetaShares Client Services

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