China’s second largest e-commerce company JD.com has closed its office in Australia less than 15 months after opening with ambitious expansion plans, the Australian Financial Review (AFR) reported, adding that the closure forms part of a company-wide response to widening losses.
The report said that the Beijing-based company sells Australian food, dairy products, vitamins and cosmetics to millions of Chinese consumers. It confirmed last week it had quietly closed its Melbourne office, which had opened with great fanfare and the backing of the Victorian government in February last year.
The AFR quoted a spokesperson for JD.com as saying that the Australia office has been integrated into the business in China and that there would be no change to its service and partnerships with Australian and New Zealand exporters, which would now be managed by JD.com staff in China. The head of its Australian operations, Patrick Nestrel, has left the company, the report said.
Although the spokesperson stressed that JD.com would continue to build partnerships with brands in a range of categories - including wine, health supplements, baby and maternal, food and beverage, cosmetics and others, the AFR report said that according to analysts, the retreat is the latest evidence that the arrival of foreign e-commerce giants such as Amazon, China's Alibaba and JD.com, ultimately has been not as big a threat to Australian retailers as previously expected.
JD.com has come under mounting pressure
The report noted that JD.com, which has partnerships in Australia with Austrade, Australia Post and Treasury Wine Estates, has had a tough year after its founder and chief executive, Chinese billionaire Richard Liu, was accused of raping a student in the US. The student filed a lawsuit last month, seeking more than $US50,000 in damages. JD.com was also criticised in China after lowering the salaries of its couriers, which were considered the backbone of the company.
JD.com's rival Alibaba also opened an office in Australia in 2017. Alibaba, which has higher margins because the onus is on brands to pay for the warehousing and delivery of products rather than the company, is believed to have no plans to scale back its operations in Australia. Alibaba says Australia is its fourth top country globally selling products into China.
Nol van Fenema