Date
20 April 2019
JD.com plans to transform the hotel into a technology research and development hub, business offices as well as a key venue for its industrial development in the district. Photo: Bloomberg
JD.com plans to transform the hotel into a technology research and development hub, business offices as well as a key venue for its industrial development in the district. Photo: Bloomberg

Why JD.com acquired a hotel in Beijing

JD.com has snapped up a hotel in Beijing for 2.7 billion yuan (US$398 million) as part of efforts to fuel its growth in China’s highly competitive e-commerce market.

A subsidiary of JD.com has acquired a 100 percent stake in Beijing Jade Palace Hotel from a state-owned asset transfer platform, according to mainland media.

The hotel is located in the capital’s Haidian District, which hosts a cluster of enterprises focused on innovation and technology development. Interestingly, one of JD.com’s offices, also in Haidian, is owned by Jade Palace Hotel. So the deal means that the tenant has acquired the property it rents from the landlord.

A spokesman for the e-commerce giant said the acquisition is part of the company’s long-term development plans. The plan is to transform the property into a technology research and development hub, business offices as well as a key venue for its industrial development in the district.

Haidian is rich in intellectual resources since it hosts several top-notch universities as well as high-tech institutions and enterprises. JD.com hopes to capitalize on its location not only to attract talent but also to push its growth as an innovation leader, while at the same time contributing to making Haidian a globally influential technology center.

Initially, JD.com plans to transform the five-star hotel into an office building.

It makes a lot of business sense to acquire a hotel building rather than buy a piece of land in Haidian. JD.com can now transform it into an office building and also as a research and development center for the company.

Some industry observers believe that the acquisition will be critical in implementing JD.com’s plans, considering that its headquarters are located in Yizhuang, in the southeastern suburbs of Beijing – quite far from Haidian District.

The new building is expected to serve as the company’s second headquarters, functioning as a research and development center while at the same time as a recruitment center.

The property is right at the center of Haidian District, which is close to large universities and Zhongguancun, a technology hub.

The company is transforming itself into a retail infrastructure service provider. It has upgraded its JD Mall into three segments: a unit to focus on customer behavior and market changes, another to provide services to satisfy customer demands, and a third to handle infrastructure-building, service support and risk management.

JD Finance has completed a brand upgrade. JD Logistics also launched a plan to build a global intelligent supply chain infrastructure network. But the company as a whole needs talent to support its growth.

Some market watchers speculate that JD.com may follow Alibaba, which introduced a high-tech hotel manned by robots and run by artificial intelligence in Beijing as part of plans to transform the hospitality sector. Alibaba has also set up high-tech restaurants and grocery stores.

JD.com, meanwhile, has also launched unmanned kitchens and restaurants.

Some industry watchers recalled that JD.com founder Richard Liu did invest in a Beijing restaurant a decade ago as part of his plan to enter the catering sector. That being the case, the acquisition of the Beijing hotel may part of his plans to expand in the catering business.

In March last year, JD.com launched a catering B2B platform to build an efficient and transparent supply chain for small and medium-sized restaurants nationwide, and launched a comprehensive catering solution for restaurants including food supply, food certification, food product development and store services.

In November, the company opened its first unmanned restaurant X Future in Tianjin. The establishment mainly relies on robots and AI solutions for its operations.

While JD.com said the hotel would be a talent hub for its research and development, it is also likely that the company will use the property to introduce new technologies for various industries such as catering business.

In that sense, JD.com also acquired the hotel to compete with Alibaba Group in the food and catering sector.

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CG

EJ Insight writer

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