Analysis – With Currys buyout, China’s JD.com could get hungered short-cut to Europe expansion

By Thomson Reuters Feb 21, 2024 | 5:24 AM

By Casey Hall, Sophie Yu and Helen Reid

BEIJING/LONDON (Reuters) – If JD.com does acquire British electronics retailer Currys, the Chinese ecommerce giant JD.com would get the store and warehouse network it needs to expand rapidly in the UK and Europe, at a bargain-basement price.

JD’s interest in the struggling retailer, unveiled on Monday, underscores the Chinese firm’s efforts to deepen its overseas presence as a counterweight to weak demand and cut-throat competition in its domestic market, analysts said.

Among top Chinese e-commerce firms, including Alibaba and PDD Holdings, JD.com relies most heavily on the domestic market, a reliance that contributed to JD.com’s share price hitting record lows last month.

The firm’s “new businesses” segment, which includes overseas units, generated 11.6 billion yuan ($1.6 billion) in sales in the first nine months of 2023, versus 17 billion yuan in the same period a year earlier, contributing just 1.5% of its total sales.

Alibaba’s international e-commerce business generated 75.2 billion yuan in revenue in the same period, or 10% of its total sales.

“JD.com is increasingly facing growth limitations in the home market,” said Liu Xingliang, director of the Beijing-based Data Center of China Internet.

Currys’ shares soared on Monday after JD.com joined U.S. activist investor Elliott Advisors in a battle to buy the British electricals group, which has already rejected Elliott’s opening bid of $880 million.

Redwheel, the biggest Currys shareholder, said on Tuesday it backed the board’s decision to reject the Elliott bid, but did not mention JD, which has not yet made a formal bid. Currys has declined to comment on JD.com’s statement of interest. A trade union for Currys employees did not reply to a request for comment.

JD.com declined to comment. It will be required to either announce a firm intention to make an offer for Currys by March 18.


Unlike peers PDD, the owner of rapidly expanding cross-border e-commerce site Temu, and Alibaba, which operates international platforms including AliExpress, Lazada and Trendyol, JD has a small presence overseas and its latest push has been largely focused on building logistics network rather than expanding into offline retail space.

Acquiring Currys would give JD access to the electrical retailer’s 21 warehouses across the UK and Ireland, 800 leasehold stores in eight countries and its stock of products at a huge discount.

“Even if that price goes up to a billion dollars, it’s going to be a fraction of the cost of what their competitors have spent to go into these markets, and they’re gonna have a ready-made brand,” said Jacob Cooke, co-founder and CEO of e-commerce consultancy WPIC Marketing+Technologies.

Currys’ current market capitalisation is 762.8 million pounds ($962 million).

It’s unclear whether JD would dispose of Currys’ stores to focus on warehouses to be aligned with its recent expansions. JD has been gradually building up its logistics network in Europe, with its property arm in 2022 acquiring a 361,000 square foot warehouse in the UK, its first in the country.

Operating a store-based firm that has around a quarter of Britain’s 20 billion pound ($25 billion) electrical market would represent a shift by online specialist JD, with the deal offering a potential shortcut to establish itself without spending hundreds of millions on marketing and brand building.

But it also comes with risks.

“A makeover will be required to turn Currys into an exciting business (but) JD has no strong track record overseas,” said Chelsey Tam, a Morningstar analyst, adding JD.com shuttered its e-commerce operations in Indonesia and Thailand last year.

Currys has struggled to grow following pandemic-era sales spikes as high inflation has prompted consumers to tighten spending across Europe. A JD.com takeover could lead to cheaper prices for consumers given its buying power with manufacturers and brands – a winning strategy for other retailers with roots in China.

“Electronics are one of the stronghold categories at JD. JD may be able to leverage its relationship with brands and competitive sourcing costs and bring more, better and cheaper Chinese electronics to Currys,” said Tam.

JD’s logistics business operates nearly 90 warehouses overseas and the company has been touting its logistics network as a tool to facilitate Chinese product sales overseas.

It also launched its own Temu-esque platform in Europe two years ago to leverage its logistics network.

The Ochama platform, which sells everything from groceries and toothbrushes to smartphones and toasters, offers home delivery in 24 European countries from its warehouse in the Netherlands and pick-up services at more than 650 locations.

UK and European regulatory hurdles are unlikely to stand in the way of JD.com’s Currys play, as electronics retail isn’t a “sensitive industry”, Tam said.

If it can pull it off, a successful reboot of Currys could be the vehicle for JD to become a major player to rival Amazon in the UK and Europe and an audacious gear shift from founder Richard Liu, known in China as an executive unafraid of making big bets.

“Acquiring Currys would be Richard Liu’s boldest move ever,” said Jeffrey Towson, a partner at TechMoat Consulting.

($1 = 0.7919 pounds)($1 = 7.1888 Chinese yuan renminbi)

($1 = 0.7930 pounds)

(Reporting by Casey Hall, Sophie Yu, Helen Reid, Sarah Young; Editing by Miyoung Kim and Kim Coghill)