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Alibaba unveils US$15B plan for global R&D programme

Luna Jia

Research Analyst

Retail 23.10.2017 / 14:37

Alibaba Group logo full

Chinese e-commerce giant will invest more than US$15 billion over the next three years into a global research and development programme, which includes seven research labs in five countries.

On October 11, Chinese e-commerce giant Alibaba announced it will invest more than US$15 billion over the next three years into a global research and development programme to increase collaboration and develop new technologies.

That sum was slightly more than double the total amount Alibaba spent on R&D between 2014 and the fiscal year that ended March 31, 2017.

The programme is called the Academy for Discovery, Adventure, Momentum and Outlook -- DAMO Academy for short. As part of the programme, Alibaba will set up seven research labs in Beijing and Hangzhou in China, San Mateo and Bellevue in the United States, Moscow, Tel Aviv and Singapore, and recruit 100 researchers to staff them.

Those labs will undertake projects in areas of data intelligence, Internet of Things, financial technologies, quantum computing and human-machine interaction, including machine learning and Natural Language Processing. They would collaborate with institutions such as the University of California, Berkeley through its RISE Lab.

The programme, Alibaba said, will be guided by an advisory board comprising researchers and educators from several top universities, including MIT.

Alibaba said the programme will help the tech giant fulfil its long-term commitment to serve 2 billion customers and create 100 million jobs in 20 years.

Other major Chinese tech companies, like Baidu and Tencent, have in recent years opened research and development labs around the world to develop new technologies.

JD.com Launches Luxury Platform

JD.com, China's largest eCommerce company, has launched Toplife, a luxury-focused online platform that aims to bring the personalised shopping experience of luxury brick-and-mortar stores to e-commerce.

Launching on October 10, Toplife offers products across a range of categories, from clothes and beauty to watches, jewellery and home furnishing, from brands like Trussardi, Rimowa, Emporio Armani and La Perla. Additional brands will be revealed in the coming weeks - for some it will be their first ever online presence in China.

According to Richard Liu, chairman and chief executive officer of JD.com, working with Toplife, luxury brands are able to directly provide customers throughout China with a true luxury shopping experience previously only associated with high-end offline stores.

The challenge for global retailers lies in “the last mile”. However, through Toplife, brands not only control and customise all aspects of their store on the platform, but also have access to JD.com’s sophisticated local logistics network, manned by more than 70,000 employees operating out of 250 warehouses and can leverage the retailer’s premium white-glove delivery service.

This isn’t JD.com’s first move into luxury. Earlier in June, the e-commerce giant invested US$350 million in billion-dollar fashion "unicorn" Farfetch.

South Korea’s Lotte to Sell China Supermarkets Chain

Lotte Group has announced plans to abandon its chain of hypermarkets and supermarkets in China as months of economic pressure from Beijing takes a toll on South Korea’s fifth largest conglomerate.

On October 12, Lim Byung-yun, a vice president at the company, said it would sell its Lotte Mart stores in China by the end of the year and that several buyers had already expressed interest.

The development follows months of speculation that Lotte would shut down its supermarket chain in China, which has for almost a year has waged an unofficial economic war against South Korean groups over Seoul’s decision to host a US-operated missile shield.

Lotte, which sold to the Seoul government the land needed to host the Terminal High Altitude Area Defence platform, was particularly hard hit.

Of its 99 Lotte Mart hypermarkets, 87 have been closed since late February. Many Chinese consumers have also boycotted the brand.

Walmart to Open More Hypermarts

Walmart, the world's largest retailer, is planning to open more compact hypermarkets in China with upgraded facilities, as it seeks to cater to the increasingly high-end and diversified demands of younger consumers.

Recently, the company said in Beijing that it would open 30 to 40 hypermarkets in the country every year, including in major cities and smaller cities, and more compact hypermarkets. Most of the compact hypermarkets are nearly 40% smaller than the usual.

Currently, Walmart has more than 400 hypermarkets in the Chinese mainland, including three compact hypermarkets in Shanghai, Kunming in Yunnan Province, and Wuhan in Hubei Province.

These compact stores have more restaurants and service-oriented shops in the rental areas, and more automatic facilities such as self-service weighing machines and self-service checkout desks.

According to Wern-Yuen Tan, President of Walmart Stores China, China has significant room for growth, and Walmart plans to do more innovations in the forms of operation

Meanwhile, the retail giant said it will launch more own-label products, including snacks and tissues, at its hypermarkets in China. Walmart said the proportion of the products in its own brands will increase from 5% to about 10 to 15%, and they will carry price tags that are about 30% cheaper than the peers.

Source: Kantar Retail

Editor's notes

* This article is based on Kantar Retail China Insight team's weekly newsletter (October 20). If you would like to receive Kantar Retail Newsletter, please send your email address to Bill.Li@kantarretail.com .

* The Chinese and English version of this newsletter do not containt the same content.

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