Richard Liu, founder and CEO of JD.com, said the company plans to challenge Amazon in Europe in 2019 and to spread across the continent within a few years. Liu said the JD.com would launch its ecommerce platform and distribution services in France, then expand to the UK and Germany.
JD.com will invest at least $1.2 billion during the next two years to establish a logistics network in France. Amazon has invested a total of $1.8 billion in Europe during the six years since 2010. JD.com has also announced it plans to enter the US market in the second half of this year.
Richard Liu said his goal is to have half the company’s profits come from the overseas market within a decade, but most products will still be sold in China. JD Finance became independent from JD.com last year.
Liu said JD.com plans to start its first European Research Center in Cambridge, UK, in the first half of 2019. It would be the company’s second research center outside China, and would focus on artificial intelligence (AI) and big data. “The talent and education in the UK are best in the world,” Liu said. He said the cost of recruiting AI programmers in Europe is now lower than in the US, and even China.
British Prime Minister Teresa May met Liu during her visit to China. After the meeting, Liu and the British government signed a memorandum of understanding, planning to sell $2.8 billion of British goods, mainly foods and beverages, to Chinese consumers by direct procurement and third parties, during the next two to three years.
Liu said he expects sales of British goods to soar to about $14 billion from last year’s revenue of about $4.2 billion to $5.6 billion in the next three years.
Unlike domestic rival Alibaba and American giant Amazon, JD.com owns and operates an independent logistics network, which is the reason it can deliver goods so quickly. JD.com has a distribution team made up by migrant workers who can deliver a box of oatmeal in less than 24 hours for less than $1 in Beijing.
“Our efficiency is mainly due to logistics management. From the very beginning, we built our logistics system on the Internet,” Liu said, “DHL and other companies built their systems based on old technology decades ago. It’s very difficult to replace the system overnight.”
Liu said he is thinking of using local partners to provide the last mile of distribution in Europe. Still, JD.com will have an independent warehouse network.
JD.com also plans to open an office in London in April to expand its local cooperation in the UK, and it has established an office in Paris for the same purpose. JD.com will also open a purchasing center in France to deal with the export of European goods to China.
JD.com invested $397 million last summer in Farfetch, becoming one of the largest shareholders of the latter and gaining a board seat. JD.com described the investment as a “big move into the luxury sector.”