The company’s potential acquisition could bring online-offline integration

Chinese mainland e-commerce giant JD’s potential acquisition of a Hong Kong supermarket chain could introduce a new model of online-offline integration to the city’s retail market, and fast-track industry transformation, experts said.

Reports suggest that JD has acquired a 70 percent stake in Kai Bo Food Supermarket for around HK$4 billion ($509.6 million). However, the mainland company said these reports “differ from the facts” in response to an inquiry from China Daily on Tuesday.

Despite this, JD did not deny the acquisition, leading industry insiders to view this move as part of a broader trend of mainland tech giants leveraging Hong Kong as a gateway to global expansion.

READ MORE: JD.com refutes reports on acquisition of HK grocery chain Kai Bo

Founded in the 1990s, Kai Bo is known for its affordable offerings such as frozen meat, grains, and fresh produce. The retailer operates around 90 stores across Hong Kong and employs more than 1,000 staff.

Zhuang Shuai, a guest adviser to the China Chain Store and Franchise Association, said JD’s entry into Hong Kong’s offline retail sector is a natural extension of its existing capabilities. Besides its well-known e-commerce business, the company operates brick-and-mortar stores, and has a strong supply chain infrastructure.

The move, he added, could bring fresh momentum to Hong Kong’s retail sector by introducing new business models, and accelerating industry transformation.

Kenneth Kwong, assistant professor of the Marketing Department at the Hang Seng University of Hong Kong, agreed, saying, “The acquisition of Kai Bo by JD is likely to ‘deepen the transformation’ of the city’s retail landscape.”

He said that JD’s core strength in supply chain management would put pressure on local food retailers, especially supermarkets and wet markets, pushing them to reassess their costs and find ways to cut expenses. “This will benefit consumers in the long run.”

Kwong also said that this development is expected to accelerate the integration of online and offline retail in Hong Kong. Beyond using acquired stores for physical sales, JD could leverage them to support “in-store pickup for online orders”, aligning with local consumers’ strong preference for brick-and-mortar shopping, he added.

Kwong also described the HK$4 billion reported acquisition price, if accurate, as a “generous deal” that underscores mainland companies’ confidence in doing business in Hong Kong.

This figure surpasses the HK$1.5 billion market capitalization of Hong Kong Technology Venture Co, parent company of the city’s largest online retailer, HKTVmall, as well as the HK$700 million valuation of International Housewares Retail Co, which owns leading home furnishing chain JHC.

ALSO READ: Hong Kong retail sales bounce back after 14-month decline

These efforts, along with food delivery company Meituan’s decision to make Hong Kong the launchpad for its overseas expansion, reflect a growing trend among mainland tech giants to use the city as a springboard for international growth, Zhuang said.

In March, JD started a new round of promotional campaign, offering services such as a 30-day return policy and a 180-day replacement guarantee for home appliances. This followed its September announcement of an initial investment of 1.5 billion yuan ($209 million) to boost its footprint in Hong Kong, with no cap on long-term spending plans.

Another mainland e-commerce titan, Taobao, opened its first brick-and-mortar furniture store in Hong Kong in February, partnering with local home repair platform Papabo. The shop operates under an online-merge-offline model, allowing customers to experience products in-store and place orders online.

Contact the writers at irisli@chinadailyhk.com