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JD.com Invests $700 Million In Chinese Supermarket Chain Yonghui

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JD.com, China’s second-largest e-commerce site, has agreed to invest 4.3 billion yuan ($700 million) for a 10% stake in Chinese supermarket chain Yonghui Superstores, it said today.

Fuzhou-based Yonghui, which had 36.7 billion yuan($5.9 billion) in sales last year, this year cracks Forbes Asia’s Fabulous 50 Companies List for the first time. The company is run by billionaire Zhang Xuansong, a high school dropout who started his career selling beer but later focused on peddling fresh meat and seafood, a strategy enabling its success in southern China.

Under terms of the deal, JD.com has the right to nominate two directors, including one independent director, on Yonghui’s board. The two companies will also cooperate in supply chain management through joint procurement and explore opportunities in the so-called “online to offline” commerce, where consumers use their smartphones to order offline services from food takeout to leisure and entertainment deals. Alibaba, Baidu and Tencent, collectively known as the BAT companies, are all investing heavily in this area to drive users to their platforms.

JD.com today also reported a 61% year-on-year increase in quarterly revenue. Net revenues for the second quarter were 45.9 billion yuan ($7.4 billion). The company said net revenues for the third quarter were expected to be between 43.2 billion yuan and 44.7 billion yuan.

JD.com, which is investing heavily to build its own logistics chain, made a net loss of 510.4 million yuan ($82.3million) in the second quarter, compared to 582.5 million yuan for the same period last year.