E-Commerce in China: How an $89 Billion Giant is Posting the Slowest Quarterly Growth on Record


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China’s largest online retailer posted its slowest quarterly growth in 15 years on Thursday, demonstrating the weakness in e-commerce amid Beijing’s trade war with the United States and sluggish consumer spending.

Image Source- Et Retails

In the second quarter, JD.com exceeded top and bottom line targets, but it reported the weakest year-over-year sales increase in company history, becoming the latest casualty of the Covid-induced economic slowdown in China.

Better profitability in the company’s primary retail business and logistics segment, however, bolstered by the yearly “618” shopping festival that takes place in China in June, gave the company a boost.

As measured against Refinitiv consensus forecasts, here is how JD.com performed in the second quarter:

Revenue increased by 5.4% year over year to 267.6 billion Chinese yuan ($40 billion) as opposed to the predicted 262.3 billion yuan.
Net profit attributable to common shareholders was 4.4 billion Chinese yuan as opposed to the predicted profit of 1.36 billion yuan.
In American pre-market trading, JD shares increased by more than 4%.

China had a resurgence of Covid-19 during the April to June quarter, which prompted lockdowns of key cities throughout the nation, including the financial hub of Shanghai, as officials battled to manage the virus’s biggest epidemic since its original dissemination in 2020.

In the second quarter, China’s GDP expanded by just 0.4% year over year. The world’s second-largest economy’s full-year growth forecasts have been lowered by investment banks.

JD.com is not the only Chinese technology business experiencing negative effects from the downturn in the global economy. The gaming and social media behemoth Tencent revealed its first revenue decrease in history this month, while e-commerce competitor Alibaba for the first time reported flat June quarter sales.

In order to increase profitability in the upcoming quarters as growth slows, Tencent and Alibaba have been decreasing spending and manpower. JD.com has also demonstrated a similar emphasis.

Compared to the same period last year, JD.com’s marketing and general and administrative costs decreased for the quarter. The company, which has its headquarters in Beijing, also saw losses in its new business section reduce, while its logistics division switched from a deficit to an operational profit in the quarter compared to the same period in 2021.

In a press statement, Sandy Xu, chief financial officer of JD.com, said, “We were thrilled to produce topline growth that exceeded the market during a tough period, as well as good profitability and cash flow.

“By placing a strong emphasis on fiscal responsibility and operational effectiveness, we have been able to return to shareholders through share repurchases and a special cash dividend paid out during the quarter. While reaffirming our dedication to long-term investing, we will keep placing our attention on producing great shareholder returns.


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