Chinese e-commerce giant JD.com (NASDAQ: JD) is setting up a joint venture—via its subsidiary—with Better Life Commercial Chain Share (SHZ: 002251) to expand its 7Fresh new retail brand in the southern Hunan province, according to Better Life’s filing with the Shenzhen Stock Exchange on Wednesday.
Suqian JD Jiapin Trade Company Limited will contribute RMB 30.6 million (USD 4.7 million) in registered capital and take a 51% stake in the new company, called Changsha 7Fresh, while Better Life will add RMB 29.4 million (USD 4.5 million) for the remaining 49% stake. 7Fresh was a new retail brand rolled out by JD.com in early 2018, allowing urban dwellers to order fresh food and groceries online to have it delivered within 30 minutes, buy or eat it directly in a store.
JD.com has opened dozens of 7Fresh outlets in cities including Beijing, Guangzhou, Chengdu, Wuhan, and Xi’an, most of which are located in the Chinese capital, competing directly with Alibaba, which owns the Hema supermarkets. “The cooperation will allow JD.com to expand its 7Fresh network quickly in Hunan,” Li Chengdong, founder of the Dolphin think tank, told KrASIA, adding that the two companies can combine their resources.
Better Life, established in 1995 in the Hunan province, has been one of the earliest supermarket chain operators to go public on the Chinese domestic capital markets. The company, which counts JD.com and Tencent as investors, now runs about 700 physical stores mainly in Hunan and Sichuan, the Guangxi Zhuang autonomous region, as well as in Chongqing in southern China, according to its website.
“It is very likely that Better Life will help the joint venture to open and operate the stores, while JD will contribute the technology, supply chain, marketing, logistics, and online operation,” said Zhuang Shuai, a retail veteran and founder of Bailian Consulting.
As a company mostly known as an e-commerce platform, JD.com has been enlarging its offline presence to compete in the era of new retail, which converges online and offline shopping. In August, it invested in convenience store chain operator Fook, which runs 1,719 stores mainly in East China’s Fujian province, to compliment its retail network and develop businesses such as neighborhood group-shopping, on-demand delivery, and retail-plus service.
JD.com last week announced a USD 700 million investment in neighborhood group-buying startup Xingsheng, which is also headquartered in the Hunan province.