Leading Chinese e-commerce platform JD.com has teamed with a major retailer to drive more sales of seafood and fresh foods in central China.
JD.com has taken a 49 percent stake in a new CNY 60 million (USD 9 million, EUR 7.8 million) joint venture, Changsha Qi Xian Information Science & Technology Co. It’s partner is Better Life Commercial Chain Ltd (which uses the name “Bubu Gao,” bubu being a Mandarin term for progress), which took a 51 percent stake for CNY 29.4 million (USD 4.41 million, EUR 3.82 million).
In its submission to China’s corporate registration office, the joint venture lists its primary activities as seafood importing, processing, marketing, and sales. The company is based in Changsha, the capital of Hunan Province, a populous area in central China where Better Life is based.
The parties in the new venture are well-known to each other. In 2018, JD.com took a five percent stake in Bubu Gao for nearly USD 150 million (EUR 122 million). Tencent, another major tech firm, took six percent shareholding at the same time.
China’s online retailers have been battling for higher sales in inland areas like Hunan, where growth tends to be higher, as those areas are starting from a lower base than the wealthiest Chinese cities like Beijing, Guangzhou, and Shanghai.
China’s retail grocery market – with an estimated value of USD 800 billion (EUR 652 billion) in 2019 – remains largely offline, with online sales accounting for just 10 percent of China’s 2019 total grocery spend in 2019, though the COVID-19 pandemic likely gave online sales a boost in 2020.
The grocery market remains a battleground, with a handful of big players like Alibaba and JD.com competing with thousands of smaller platforms, most of them loss-making. To get an edge, the corporate giants have worked hard to expand their geographic and demographic reach. Both Alibaba and JD.com have introduced or invested in live-stream buying technology and apps enabling rural dwellers to buy in groups.
Chinese online sales via live-streaming and short-video formats more than doubled between 2019 and 2020, to almost CNY 1 trillion (USD 150 million, EUR 130 million) according to Fitch Ratings.
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