China’s JD.com to Buy Over $1.2 Billion of US Beef, Pork
JD.com, China's largest retailer and e-commerce company, on November 8 participated in a signing ceremony held at the Great Hall of the People in Beijing, with the company entering agreements to purchase in excess of $1.2 billion of beef from the Montana Stock Growers Association (MSGA) and pork from Smithfield Foods, Inc. The deal is part of an overall commitment by JD to buy $2 billion of US goods across a wide range of categories over the next three years.
US Secretary of Commerce Wilbur Ross, Jr. and Chinese Vice Premier Wang Yang were in attendance to witness the signing ceremony. On the same day Chinese President Xi Jinping and his wife Peng Liyuan gave US President Donald Trump and First Lady Melania Trump a personal tour of the Forbidden City, as they rolled out the red carpet for their guests’ three-day tour of the PRC. During the visit it is expected that business agreements valued at $9 billion will be inked between Chinese and US enterprises.
Meat products are a fast growing category for JD. In the first half of 2017, volume from direct sales of meat on the JD platform increased by more than a whopping 780% year-over-year, with imported meat accounting for more than 30% of those sales. Online orders for frozen and fresh meat come chiefly from first and second-tier cities, leaving huge potential for growth in online sales from the rest of the country.
"These groundbreaking agreements bring together two of America's most trusted and in-demand meat suppliers with China's leading e-commerce platform, to the benefit of both US producers and Chinese consumers," said Richard Liu, chairman and chief executive officer of JD.com, who participated in the signing ceremony.
"China's shoppers will rest assured knowing that they are able to purchase safe, high quality meat products imported from the US, with the fast delivery and ironclad assurance of authenticity that they have come to expect from JD. We look forward to expanding our long term cooperation with US meat producers like Smithfield and MSGA."
JD will import Montana-sourced beef from Cross Four Ranch and MSGA members to China for direct sale to the 258 million Chinese consumers on its e-commerce platform. The procurement agreement is for an initial three years, with a minimum commitment of $200 million in beef to be imported by JD from Cross Four Ranch and MSGA members at fair market value during the term. It is estimated that JD's purchase of Cross Four Ranch and MSGA beef will increase Montana beef export sales by as much as 40% in 2018.
"This is a landmark agreement to increase Montana agricultural exports to the fastest growing overseas market for beef," said US Senator Steve Daines. "This is a win for Montana's hardworking ranchers."
Beef is the fastest growing meat sector in China and the country is the world's fastest growing overseas market for beef, following the resumption of American imports earlier this year.
China is the world's largest producer, consumer and importer of pork. According to official estimates, Chinese pork imports more than doubled in 2016, reaching a substantial 1.6 million tons shipped.
JD's extensive cold chain logistics capabilities will ensure that US meat products arrive at customers' doors safely and rapidly. The beef and pork will be transported in both frozen and chilled form from the United States and stored in JD's own warehouses in China. From there, JD will deliver the meat to customers in more than 100 cities across the country within 48 hours – and to many in as little as six hours.
Boasting a complete cold chain solution, JD is able to monitor the temperature and humidity of products from warehouse to delivery. Its cold chain logistics network currently includes 12 refrigerated warehouses in China, enabling the safe delivery of perishable products to customers in 300 cities.
JD.com is both the largest e-commerce company in China and the country's largest retailer by revenue. Through a user-friendly website, native mobile apps, and WeChat and Mobile QQ entry points, the company offers consumers a superior shopping experience. It has the largest fulfillment infrastructure of any e-commerce company in the PRC. As of June 30, 2017, JD.com operated seven fulfillment centers and 335 warehouses covering 2,691 counties and districts across China, staffed by its own employees.