China's JD.com Inc is in advanced talks with Central Group to launch an e-commerce joint venture in Thailand with a planned total investment of $500 million (16.7 billion baht), people familiar with the matter told Reuters.
The venture will help China’s second largest e-commerce retailer expand its overseas business beyond Indonesia and boost its presence in Southeast Asia where rivals Alibaba Group Holding and Amazon are ramping up competition with new services, such as a quick delivery service in Singapore.
Indonesia currently accounts for almost all of JD.com's investments outside China, including an e-commerce platform and travel start-up, Traveloka.
JD.com plans to enter the Thai market later this year and use Thailand as a hub to service other countries in the region such as Vietnam and Malaysia, JD.com chief executive Richard Liu told Reuters in June.
The joint venture with Central Group, owned by the billionaire Chirathivat family, Thailand's third-richest, will focus on e-commerce and finance sectors, one of the sources said. The deal has yet to be finalised as the companies are unable to agree on ownership terms, two sources said.
JD.com declined to comment on the joint venture and Central Group did not respond to requests for comment. The sources declined to be named as the talks are not public.
The joint venture will be another attempt by Central Group to penetrate the country’s fast-growing e-commerce market, after it purchased the Thai arm of online fashion retailer Zalora last year.
Thailand’s e-commerce market, valued at $900 million, is expected to grow 29% over the next 10 years, according to a report from Google and Temasek published in 2016. Major players include Alibaba-backed Lazada, the CP Group unit Ascend and South Korea's 11 Street.
The same report estimated that the e-commerce market in Southeast Asia, a region of around 600 million, will soar 16-fold to $88 billion by 2025.
For JD.com, the investment in Thailand would come after it ended talks last month to invest in Indonesian online retailer Tokopedia, which instead raised $1.1 billion from a group of investors including Alibaba, a separate source told Reuters.