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Chinese e-commerce giant JD.com pulls the plug on Indonesia and Thailand sites in Southeast Asia logistics pivot

Chinese e-commerce giant JD.com is pulling the plug on its Thailand and Indonesian platforms in a major setback for the company’s overseas expansion efforts, a move that comes as the country’s Big Tech firms rein in costs amid stalled growth in the domestic internet market.

The Beijing-based company’s joint ventures in the countries – JD Central in Thailand and JD.ID in Indonesia – posted the announcements to their websites on Monday. JD Central will cease operations on March 3, while JD.ID will stop on March 31. Both sites will stop accepting orders on February 15.

The statements confirm an earlier South China Morning Post report that JD was mulling ways to exit the markets to refocus on growth at home after years of expansion in Southeast Asia.

JD plans to pivot from running its own regional e-commerce platforms to building “a cross-border supply chain network with logistics and warehousing” to serve regional global customers, including those in Southeast Asia, a company representative said.

“We will continue to channel our resources toward building cross-border supply chain infrastructure and work with both local and global partners to deliver supply chain solutions around the world,” JD said in a statement. The company did not mention arrangements for its employees at the local branches.

JD.ID and JD Central did not immediately respond to requests for comment on Monday.

The Chinese tech giant launched JD.ID in 2015 through a tie-up with local investors, including Provident Capital, to tap into the then-burgeoning Indonesian e-commerce market. Two years later, the company launched JD Central with Thai property and shopping mall developer Central Group.

Over the past few years, e-commerce has emerged as one of the largest drivers of growth in the region’s digital economy, according to a report from Google, Singaporean sovereign fund Temasek and global consultancy Bain and Company.

The growth potential drew in a swarm of new players, contributing to a red-hot competition in the industry. A fierce rivalry between Singapore-based firms Shopee, owned by Tencent Holdings-backed Sea, and Alibaba Group Holding’s Lazada emerged, along with a slate of other local players, leaving little room for JD to find a profitable foothold.

Alibaba owns the Post.

JD.ID and JD Central both lagged behind major competitors in their markets, according to data from e-commerce market intelligence service iPrice. In the second quarter of 2022, JD.ID ranked 10th in Indonesia, where the market is dominated by local behemoth Tokopedia and Shopee.

In other markets, including Malaysia and Poland, JD has already been increasing its investments in supply chain solutions for local clients through its JD Logistics subsidiary.

Last year, JD Logistics teamed up with Biedronka, Poland’s largest discount supermarket chain, to help amp up the retailer’s online presence using its warehousing and distribution capabilities to fulfil e-commerce orders.

The company has also been working on two industrial parks in Vietnam, where it will provide logistics solutions and warehousing capacity.

Source : SCMP