JD.com to list its property, industrial units in Hong Kong

By YU Hao

Chinese e-commerce giant JD.com is planning to spin off two of its business units – JD property and JD industrials – through separate Hong Kong listings.

JD.com now holds 74.5 percent of JD Property and 78 percent of JD Industrials. After listing, JD.com will still hold more than 50 percent of each company, and both will remain its subsidiaries.

Right kind of development

Founded in 2018, JD Property builds and manages property – mostly industrial parks – at home and abroad. The company has more than 50 properties in China and 25 projects overseas. It also operates more than 100 megawatts of photovoltaic roof projects.

Back in 2018 when JD Property was founded, the Chinese government was tightening macro control policies on the property market and beefing up regulation of lending. The moves successfully curbed some leverage of real estate bubbles and encouraged the right kind of development. Having been founded at the very beginning of this tempestuous new era in China’s property market, JD Property was forged in a very different fire from China’s older developers.

Most of JD Property’s overseas projects are in Southeast Asia. Since 2021, it has invested heavily in logistics parks in Indonesia.

According to its prospectus, JD Property’s revenue grew from 582 million yuan (US$85 million) in 2020 to 2.3 billion yuan in 2022, with gross profit rising from 229 million yuan to 1.64 billion yuan.

Problem of efficiency

Marketing itself as a way of dealing with some of the low-efficiency, high-cost issues among Chinese enterprises, JD Industrial describes itself as a comprehensive provider of industrial supply-chain technology and services.

China's secondary industry output value rose from 33.3 trillion yuan to 48.3 trillion yuan between 2017 and 2022, with a compound annual growth rate of 7.7 percent. But statistics also showed that in 2022, operating costs of large-scale industrial enterprises in China accounted for 84.7 percent of total revenue; while data from the China Federation of Logistics & Purchasing indicated that the penetration rate of digital procurement in the country was only about 7.5 percent in 2022.

Independent operation

JD Industrials started to operate independently in 2017 and has so far closed two financing rounds that pushed its value to US$6.7 billion. At the end of 2022, JD Industrials was able to provide 48 product categories and approximately 42.5 million SKUs.

Data from China Insights Consultancy showed that in terms of GMV, JD Industrials is the largest service supply chain provider, occupying 4.1 percent of the total market. Its revenue grew quickly from 7 billion yuan in 2020 to 14 billion yuan last year.