Streamlining leads JD.com to move offshore

International online marketplace JD.com last week announced it would be closing its Australian office after only 15 months in the region. It said that instead of a maintaining a local presence, it would integrate those operations into the business in China to streamline the communications and decision-making processes.

The process involved JD.com’s head of Australian operations, Patrick Nestrel, stepping down from his position after almost two years in the role.

A JD.com spokesperson told Inside Retail that the operational change did not signal a shift away from the Australian market, and that there will be no observable impact on existing operations for current brand partners.

“The actual importance of the Australian market doesn’t change,” the spokesperson said.

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“It’s simply a different approach to doing the work. It’s a more streamlined, more effective [method] of communicating with brands directly from China… We just don’t need an office presence [in Australia] right now.”

According to the spokesperson, using the Australian office as an intermediary sometimes made communication between JD.com’s Beijing office and Australian brands more complicated. And while having a local presence made face-to-face meetings easier, such meetings were not out of the question for management in China, who will still fly out to Australia when necessary.

Products are still popular

“The ANZ region offers superb products that are highly popular with Chinese customers, and our business is going well,” the spokesperson said.

“They love them, so that’s not something we’re going to step away from.”

JD.com sources various products from Australia, such as Penfolds wine, Bundaberg ginger beer, Natural Confectionery Company’s Party Mix, and Weetbix.

When JD.com first opened the Melbourne office in February 2018, it was seen as an opportunity for more Australian brands to enter the burgeoning Chinese retail market.

However, Australia isn’t the only international expansion by JD.com that has been seemingly under threat, with Retail Detail reporting in January that the business’ European expansion plans are in trouble, including the potential cancellation of a German headquarters.

This is due to the business’s struggling operations, Retail Detail reported, signalled by falling investor confidence – with the company’s share price having dropped 35 per cent, from approximately US$44 per share in in June 2018 to US$28 per share in this month, largely due to claims of sexual violence made against JD.com chief executive Richard Liu.

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