Alibaba, JD.com Strike Deal To Open Ecosystems Amid Slowing Growth And China's Antitrust Pressure

Ahead of the Double Eleven shopping festival, Chinese e-commerce titans Alibaba Group BABA and JD.com Inc. JD have decided to integrate their ecosystems to combat slowing user growth and increased regulatory scrutiny.

What Happened: Chinese e-commerce giants Alibaba Group and JD.com have agreed to open their ecosystems to each other. The deal comes as both companies face slowing user growth and increased antitrust scrutiny from Beijing, Nikkei Asia reported on Friday.

The agreement will see Alibaba’s Taobao and Tmall platforms integrate JD.com’s logistics services. Meanwhile, JD.com will add Alipay, Alibaba’s fintech arm, as a payment option. This move aligns with Beijing’s antitrust directives, sources told Nikkei Asia.

Additionally, JD.com will utilize Cainiao Global Express and Cainiao Stations, which are part of Alibaba’s logistics network. The integration is set to begin in late October, just ahead of the Double Eleven shopping festival.

Currently, JD.com prioritizes JD Pay, UnionPay, and WeChat Pay for transactions. The inclusion of Alipay is expected to enhance payment flexibility for users.

In a separate initiative, Taobao Hong Kong will launch a three-month promotion starting Oct. 1. Orders over 99 yuan will have waived delivery fees, and new users will receive a 300-yuan coupon, according to David Ye, General Manager of Taobao Tmall World.

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Why It Matters: The collaboration between Alibaba and JD.com is significant in the context of their recent competitive maneuvers and regulatory challenges. Earlier this year, both companies engaged in aggressive price cutting in the cloud computing sector, slashing prices by up to 55% on over 100 services to regain market share.

Moreover, the Chinese government has been ramping up antitrust scrutiny on major tech companies, pushing them to open their ecosystems and reduce monopolistic practices. This collaboration aligns with these regulatory directives, aiming to foster a more competitive and open market environment.

Additionally, both Alibaba and JD.com have seen positive market reactions on Friday following economic stimulus measures announced by China’s central bank. The People’s Bank of China recently reduced the amount of cash banks need to hold and outlined plans to support the struggling property market, boosting investor confidence. As a result, Alibaba’s shares rose by 2.17%, while JD.com’s shares increased by 4.90%.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari