A $68-billion Chinese e-commerce giant plans to stir further competition in the U.S. online retail market, which will test Amazon’s dominance in the industry.
New York-listed JD.com Inc. floated its plans to expand in the U.S. by the second half of 2018. However, a major challenge involves the U.S. government’s protectionist approach on foreign business.
West Coast debut
JD’s debut in the U.S. will happen via a logistics launch in Los Angeles. It may rely on Wal-Mart Stores Inc., which is a company shareholder, for initial support on operations in the biggest West Coast city. JD CEO Richard Liu said that partnerships with U.S. companies might be an option for a likely multiple-entry expansion.
The company’s entry in the country serves as one component of its international expansion, as it also looks to set up business in several countries near China. For American e-commerce firms, JD’s plans only highlight the need to adopt strategies to remain relevant among shoppers, such as offering point-of-sale or POS lending or competitive pricing strategies.
While JD embarks on an ambitious drive in the U.S., Liu believes that the road ahead will be a challenging one. An increasing number of trade barriers serve as a deterrent not just for JD’s investments, but also for other Chinese companies as well, he said.
Liu believes that a protectionist approach will negatively affect the U.S. economy. Still, the company expects to use its alliance with big local companies to achieve its plan. Once it succeeds to do business in the country, Liu targets overseas operations to account for 50% of company revenues in the next 10 years.
JD will still have several clear hurdles before it has a chance to challenge Amazon’s market leadership. However, the Chinese firm’s keen intention to do business should serve as a signal for smaller players to think of ways on how to stay competitive.