In the late 1990s, back in the early days of the Internet in China, the growth runway for companies willing to take risks in the online space appeared endless. 

One of those firms was JD.com (SGX: HJDD) and the company was actually founded in 1998 – one year before its freewheeling e-commerce rival Alibaba Group Holding Ltd (SGX: HBBD). 

Originally known as “360buy”, JD.com started life as an offline magneto-optical store in Beijing but soon transitioned itself to e-commerce in 2004. For many years, JD.com was seen as the serious, logistics-first alternative to Alibaba’s third-party, merchant-focused e-commerce empire.

Indeed, when it first listed its shares in New York in 2014 (raising US$1.78 billion in the process), it was the largest ever fundraising by a Chinese Internet company.

It later carried out a secondary listing in Hong Kong in June 2020. But in recent times, the company struggled to stay in the spotlight.

Competitors like Pinduoduo (also known simply as PDD Holdings) surged ahead by capturing China’s value-driven shoppers with new or improved models of consumption, such as live-streaming and group-buying.

Meanwhile, Alibaba restructured its empire and Meituan (SGX: HMTD) dominated food delivery. On the other hand, JD.com appeared to be standing still. But that now appears to be changing.

JD founder Richard Liu has commented that the past five years were JD’s "most unremarkable" period. Now, the company is trying to write a new chapter. It’s one that’s being powered by an aggressive push into food delivery, a bold overseas expansion, and a renewed focus on high-quality products and premium logistics. 

In some ways it’s getting back to its roots (logistics-driven expertise) but in others, it’s entering completely new waters (food delivery). 

The story of JD’s turnaround is still being written but with earnings starting to pick up – and major strategic bets being placed – many investors now see JD.com as a potential “value” play in the China tech space.

JD.com is China’s largest online retailer by revenue. Think of it as the “Walmart of China”. It sells an incredible amount of stuff and rakes in massive amounts of revenue; in 2024 alone its sales came to RMB 1.16 trillion (US$158.8 billion). 

Alibaba? In its Fiscal Year 2025 (ending 31 March 2025), the e-commerce rival to JD.com reported revenue of RMB 996 billion. 

The one issue for JD.com, which has been a perennial bugbear for investors, is that this huge amount of revenue creates only a small amount of profit given the razor-thin margins it operates on. Indeed, when compared to other Chinese Internet platform firms, JD.com does lag far behind its peers.

Operating margin of large listed Chinese Internet companies

Source: Bloomberg, calculations based on the four quarters ended Q4 2024

It’s become known primarily for its self-operated logistics infrastructure and it’s a moat that rivals have struggled to replicate. However, that doesn’t mean it’s been able to dominate as much as it wishes.

Unlike marketplaces that connect sellers and buyers, JD controls much of its own inventory and delivery. That has allowed it to pivot faster than rivals and deliver reliable fulfilment, even in remote parts of China.

For a long time, this model worked well. JD attracted customers who valued authenticity, branded goods, and delivery speed. But the consumption landscape in China has shifted.

The post-COVID retail landscape in China has been dominated by price sensitivity, and upstarts like PDD have grown rapidly by offering ultra-cheap products via channels like live-streaming and community buying.

JD, on the other hand, has stuck to its premium positioning and paid the price in slowing user growth. With the Chinese economy slowing, price-sensitive consumers have turned to platforms like PDD and video app Douyin (owned by ByteDance).

JD’s Q1 2025 earnings offered the clearest signs yet that this isn’t the same passive JD from a few years ago.

Revenue jumped 16% year-on-year to RMB 301.1 billion (US$42 billion). That was its fastest pace of growth in three years. Net income surged 53%, hitting RMB 10.9 billion.

The numbers don’t appear to be a “one-off”. They’re being powered by a combination of government stimulus and a clear shift in JD’s go-to-market strategy. But it’s food delivery that’s making headlines.

In just a few short months, JD has grown its daily food delivery orders to nearly 25 million – more than one-fifth of Meituan’s market peak.

That’s a staggering feat considering it only entered the market earlier this year. It also highlights how JD is leveraging its supply chain strength and fulfilment capabilities in adjacent markets.

Of course, growth like that doesn’t come cheap. JD has spent heavily on subsidies; RMB 10 billion worth of incentives for users and it has recruited 100,000 full-time delivery riders. 

That helped double the operating losses in its “new business” segment to RMB 1.3 billion (and making up 23.1% of the segment’s top line), compared to RMB 670 million a year earlier.

Still, management insists this isn’t a short-term stunt. CEO Sandy Xu told analysts that food delivery is “a natural extension” of JD’s core business. Founder and Chairman Richard Liu went a step further, saying that 40% of JD’s new food delivery users have since become e-commerce customers.

In a market as cutthroat as China’s, building that kind of cross-platform user base is invaluable. Additionally, JD’s business – at least at the retail level – was still able to deliver RMB 12.8 billion in operating income in Q1 2025 (albeit at a 4.9% operating margin).

JD Retail Operating Income

Source: JD.com Q1 2025 investor presentation

JD isn’t stopping at food delivery. In July, the company announced plans to acquire Ceconomy AG, Europe’s largest consumer electronics retailer and the parent of MediaMarkt and Saturn. The all-cash deal values the German company at €2.2 billion (US$2.6 billion) and marks JD’s most serious overseas push to date.

In a way, it’s similar to Meituan’s own push into key food delivery markets such as the Middle East. Platform companies in China are running out of growth in their domestic market so they’re being forced to look overseas for future expansion in their core businesses.

But the rationale for JD is clear: JD wants to build a premium, localised e-commerce model in Europe and one that plays to its strengths in branded goods and logistics. Unlike Temu and Shein, though, it doesn’t want to rely on low-cost, cross-border shipping. 

Ceconomy operates over 1,000 stores across Germany, Spain, and Italy. While JD won’t make immediate changes to operations or staffing, it will likely use the infrastructure to expand its supply chain network in the region, and eventually launch its own e-commerce platform in Europe with a targeted date of 2026.

JD’s entry into food delivery has stirred the pot. Meituan has been forced to respond with its own promotions and incentives. JD’s riders are reportedly being offered above-industry pay and benefits, while the company positions itself as a more reliable and service-focused alternative.

However, analysts have some concerns. JPMorgan estimates that food delivery could cost JD up to RMB 18 billion annually in losses, potentially wiping out 36% of its parent’s 2025 operating profit. Is that a price worth paying for market share over the longer term?

Others wonder whether the Chinese good delivery market really has room for another major player, especially one that’s paying such a high price to acquire users.

The Chinese government is also watching closely. Chinese regulators recently summoned JD, Meituan, and Alibaba executives for a warning over “unruly competition”. It’s a clear signal that the price war could attract further scrutiny from authorities.

Shares of all three have suffered as the price war has intensified from earlier this year. So the key question is: Can JD build long-term value in food delivery, or will it just burn cash chasing Meituan in vain? If it’s the latter, then JD shareholders will not be best pleased.

Currently, JD shares look cheap. On a trailing 12-month basis, the stock is trading at a price-to-earnings (PE) ratio of just 7.8x.

When compared to Meituan, at around 20x, and Alibaba, at 16.3x, it’s a bargain. However, the big question for investors is whether margins can expand even as revenue grows. That’s not a certainty right now for investors.

Indeed, investors who do want to buy into JD are investing into the story of the firm’s logistical and premium-end prowess winning over consumers in both China and overseas. Furthermore, with its foray into the food delivery space, short-term margins and profits are likely to come under pressure.

In other words, this is more of a “bet” on JD winning this battle in food delivery while also continuing to grow its core e-commerce business. 

For investors, some of the key risks are obvious. First off is the sustained losses from food delivery and other new ventures that could impact already-thin margins 

Meanwhile, regulatory risk remains in the food delivery space, especially as JD ramps up competitive tactics. There’s also worries over execution risk in Europe. That’s uncharted territory for JD, and retail integration in Europe is notoriously complex.

Finally, there’s also the anaemic state of the economy in China and particularly of the Chinese consumer sentiment. Should there be a further drop-off in consumer spending, then JD will be one of the first companies to suffer

Buying JD.com’s Hong Kong-listed shares directly can be a hassle for everyday investors in Singapore. You’d need access to the Hong Kong market and be prepared to purchase them in standard board lots of 50 shares — which works out to roughly HK$6,250, or around S$1,025 per lot at current prices.

But thanks to SGX’s Singapore Depository Receipts (SDRs) for Hong Kong-listed stocks, that barrier to entry becomes much more manageable. For JD.com’s SDR — listed under the ticker HJDD — the underlying share ratio is 10:1, meaning every 10 SDRs represent 1 JD.com underlying share in Hong Kong.

And because the minimum lot size for SDRs in Singapore is just 100 units, you can get started with as little as S$205, giving you exposure to JD.com without needing to invest a large lump sum upfront.

These SDRs give investors a beneficial interest in the actual Hong Kong-listed shares, which are held by a custodian on behalf of the SDR issuer, who in turn holds them for you, the investor.

That means no foreign brokerage accounts, no additional FX spreads, and no worries about navigating the complexities of overseas markets. 

Another practical advantage? Dividends are paid out in Singapore dollars. For investors who are used to dealing with foreign holdings, this simplifies things by eliminating currency conversion fees or cross-border tax questions on small amounts.

Finally, the SGX HK SDRs are fully fungible. That means you can convert your SDRs into the actual Hong Kong-listed JD.com shares at any time through your broker.

For Singapore-based investors looking to tap into China’s e-commerce growth story, JD.com’s SDRs offer an easier, lower-cost, and more convenient way to do it.

Tim has spent over 15 years in the finance industry with the likes of Schroders, The Motley Fool, and CGS International. 

He’s passionate about helping people take control of their finances by building wealth through long-term investing and thinking more coherently on all things "money".

Tim hopes to share the experience he’s garnered having worked in asset management, securities, and private wealth. He loves breaking down complex financial topics into content that’s easy to understand and, most importantly, engaging.

Give him a follow on TikTok @timtalksmoneysg and Instagram @timtalksmoneysg or subscribe to his free weekly newsletter at TimTalksMoney.com for more money and investing insights.

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