RETAIL giant Central Group is joining with Chinese e-commerce operator JD.com to invest up to US$500 million on the establishment of two joint ventures in Thailand covering online sales and financial technology (fintech) services.
Under the agreement announced yesterday, half of the investment will come from Central Group, with the remainder from JD.com, known for its e-commerce platform in China, and financial technology operator JD Finance and Provident Capital, which is also JD.com's strategic partner for its Indonesian e-commerce business. It will be the partner in the fintech joint venture.
Across both the e-commerce and fintech businesses, Central Group will leverage its extensive retail resources, including its physical store network, which will serve as key omnichannel and payment locations.
It will contribute its brand and merchant relationships, as well as its retail behaviour insights from its popular customer loyalty programme, “The 1 Card”.
To strengthen product offerings and accelerate its own omnichannel business growth, Central Group will open multiple flagships stores of its omnichannel businesses on the new joint e-commerce platform.
JD.com will provide its expertise in technology, e-commerce and logistics to the e-commerce joint venture, while the fintech services joint venture will benefit from JD Finance’s experience in the fast- moving sector. JD Finance has launched what it promotes as easy-to-use fintech services in developing markets using its capabilities in artificial intelligence, cloud computing and other technologies.
“JD’s proven track record of successfully building out national online retail businesses made it the obvious choice for our e-commerce partner,” said Tos Chirathivat, chief executive officer of Central Group.
“Thailand’s mobile-driven population, with its increasing consumer spending power, makes e-commerce ready to explode, and this partnership is poised to better serve the country’s consumers as they migrate online.
“This move marks a key step in Central Group’s journey to become Thailand’s online retail leader.”
The management teams would be jointly appointed by JD.com, JD Finance and Central Group.
“We believe bringing together the best talents from the shareholders, as well as combining the operational know-how from JD with the local relationships and commercial experience from Central, will provide the best management team for the joint ventures,” Tos said.
“We have already established local teams in Thailand across the key operating functions.
“We expect to beta test the e-commerce platform as early as the fourth quarter of this year, and to officially launch in early next year, subject to customary regulatory approval for the required operating licences.”
The fintech services venture would benefit from JD Finance’s deep knowledge of the fintech sector and Central Group’s immense retail resources to offer innovative financial products and services aimed at benefiting both consumers and partners.“We will focus our first year of operations on developing and fine-tuning the business model and platform to deliver the best online retail experience for users, to expand our merchant partners and our product assortment.
“For the finance JV, we will focus on testing and developing differentiated financial services and products.
“Once we have established the right business models and solutions for our customers, we will turn our attention to growth and monetisation.”
Richard Liu, JD.com’s chairman and CEO, said: “Thailand’s large population and developed infrastructure, including strong national logistics networks, give it tremendous potential for both e-commerce and fintech services.
“Working with Central Group, Thailand’s strongest retail group, with a massive shopping mall and department store network, gives us a huge competitive advantage as we expand further into Southeast Asia.”
Chen Zhang, JD.com’s chief technology officer, said Central Group is one of the largest offline retail players, while JD.com is a leading online retailer in China, “so the JV is a great combination”.
E-commerce and fintech go closely together, as fintech helps with risk management, which involves all stakeholders in the supply chain as well as merchant and buyers, he said.
“We have experienced 13 years in doing e-commerce and finance services in China and 18 months in Indonesia,” Zhang said.
Thailand is the second overseas country for JD.com’s expansion, following Indonesia. “There is much room to grow in e-commerce in Thailand,” Zhang said.
“Only 2 per cent of Thailand’s whole retail industry is online retail or e-commerce, while it is 15 per cent in China’s retail industry and 10 per cent in the US retail sector.”