JD.com Surpasses Revenue Expectations Amid Government Subsidies and Discounts
JD.com Surpasses Revenue Expectations Amid Government Subsidies and Discounts: March 6 (Reuters) – Chinese e-commerce giant JD.com exceeded market expectations for quarterly revenue on Thursday, driven by deep discounts and government subsidies that encouraged consumer spending, leading to strong year-end sales.
U.S.-listed shares of JD.com surged over 6% in premarket trading following the announcement. Vinci Zhang, an analyst at M Science, noted that while the results were strong, the revenue boost was primarily driven by electronics and home appliances, which benefited significantly from government subsidies. However, he questioned how much of the revenue growth was organic.
The Chinese government has been ramping up fiscal stimulus to boost domestic consumption. This includes incentives for consumers to trade in older household goods in exchange for updated appliances, contributing to increased sales for retailers like JD.com, which is a major home appliance retailer in China.
SPDB International had already raised its fourth-quarter revenue forecast for JD.com in January due to the government’s trade-in policy. The firm predicted a significant rise in electrified product category sales, particularly home appliances and computers, fueled by national subsidies.
JD.com and rival Alibaba have been aggressively cutting prices across various product categories, from toys to tech appliances, to attract shoppers amid heightened competition. The price war comes at a time when consumer spending in China has sharply slowed.
Beyond e-commerce and logistics, JD.com is expanding into new business areas. In February, the company announced its entry into the food delivery sector. Zhang from M Science commented that food delivery is a natural extension for JD.com, given its extensive warehousing and logistics infrastructure.
JD.com’s Q4 Financial Highlights
| Metric | Q4 2023 | Q4 2022 | Change |
|---|---|---|---|
| Total Revenue | 346.99 billion yuan ($47.91 billion) | – | +13.4% |
| Net Income (attributable to shareholders) | 9.9 billion yuan | 3.4 billion yuan | Significant Increase |
($1 = 7.2430 Chinese yuan renminbi)
JD.com’s strong performance underscores the impact of government policies and strategic discounting on consumer behavior, positioning the company for continued growth amid economic headwinds.