Why JD Shut Its Australian Office

Australian office’s responsibilities shifted to China

JD.com (JD) quietly shut its Australia office, transferring the office’s responsibilities to its home country’s office, reports The Australian Financial Review. JD opened an Australian office in February 2018 following a similar move by rival Alibaba (BABA).

JD’s Australian office coordinated the sale of popular consumer products sourced from suppliers in Australia and New Zealand to consumers in China. JD says the closing of its Australia office will not affect this business. As China’s middle-class population swells, the demand for high-quality imported products is growing. JD and Alibaba (BABA) have responded by partnering with overseas suppliers to feed the strong demand.

Why JD Shut Its Australian Office

JD attempting to control costs

While JD has not explained why it has closed its Australian office fewer than 15 months after it opened, the move is viewed as part of the company’s broader scheme to control costs. In recent months, there have been reports of JD shrinking its workforce and altering the way it compensates its delivery people in apparent attempts to boost efficiency and cut costs. Last month, The Information reported that JD was planning to eliminate more than 12,000 jobs, or ~8.0% of its workforce.

JD’s operating expenses jumped 19.8% YoY (year-over-year) to $17.8 billion in the first quarter, while Amazon’s (AMZN) rose 12.6% YoY and eBay’s (EBAY) fell 1.0% YoY. Alibaba’s and Etsy’s (ETSY) operating expenses rose 60.7% and 29.2% YoY, respectively.