Following its expansion into Hong Kong's e-commerce sector, JD.com (9618) is now making a significant move into the local food retail industry. According to market sources, Hong Kong's well-known chain food retailer Kai Bo Food Supermarket has been acquired by JD.com, with the signing of the agreement completed approximately four months ago.
The acquisition includes Kai Bo's retail network and property assets, with the transaction valued at approximately HK$4 billion. Sources said that JD.com and Kai Bo will establish a new company in August to oversee daily operations. In response to inquiries from Wen Wei Po, JD.com stated that all details should be confirmed by the official announcement.
In an official statement, however, JD.com clarified that "the leaked information contains substantial discrepancies from the actual situation," advising the public to await formal announcements from the company.
A source close to JD.com revealed that while certain media outlets reported an acquisition price of HK$4 billion, the actual transaction amount is considerably lower. The insider emphasized JD.com's plans to leverage its supply chain strengths to enhance Hong Kong's retail market with premium product offerings. Official details are expected to be released in August 2024.
Transition period of three years
Market insiders further disclosed that the acquisition agreement includes a "transition period" clause, stipulating a three-year handover phase. During this time, JD.com will not immediately assume control of operations. Instead, Kai Bo's founder, Lam Hiu-ngai, and the existing management team will continue running the business, with no major changes to personnel or operations. The next steps will be determined after the transition period concludes.
Documents circulating online have further confirmed the news. A notice issued by Kai Bo's parent companies, Moretide Investments Limited and Oceanus Food Trading Limited, to their business partners stated that "Kai Bo Food Supermarket / Kai Bo Frozen Meat Supermarket is undergoing a business transfer" as part of strategic development efforts. The transaction with new investor JD.com will involve adjustments to existing partnership arrangements.
The notice also mentioned that, to ensure a smooth business restructuring process, partnerships with merchants will officially transition to the new business entity starting August 1. The new entity will assume all rights and obligations under current agreements.
Additionally, sources close to the deal revealed that the transaction is valued at approximately HK$4 billion, covering Kai Bo's retail network and property assets. "Kai Bo owns at least 20 to 30 stores, with an estimated cost of over HK$1 billion."
From street vendor to retail empire
Historical records show that Kai Bo's founder, Lam, immigrated from Chaozhou to Hong Kong in the 1980s and initially worked as a fruit hawker in Chai Wan. Later, he used his savings to co-invest in a frozen meat store with friends. Kai Bo was officially established in 1991, adopting a mass-market positioning. Today, it operates around 90 stores across Hong Kong, employing over 1,000 staff.
JD.com's aggressive expansion
Since March this year, JD.com has been actively strengthening its presence in Hong Kong's retail market. The company has rolled out enhanced promotions for Hong Kong consumers on its app, including a "price-match guarantee," a "30-day return policy and 180-day replacement warranty" for self-operated appliances, and "free shipping for single items," signaling a bold entry into the local e-commerce sector. Rumors also surfaced that JD.com plans to open its first physical "JD MALL" in Hong Kong, specializing in home appliances, with a flagship store reportedly secured in Wan Chai and expected to open within the year.
In February, Alibaba (9988), another Chinese e-commerce giant, partnered with home repair platform "Papabo" to open its first physical furniture and home goods store in Hong Kong, named "PapaHome Taobao Furniture Store." The store has been well-received, and a second branch in Causeway Bay is expected to open in the fourth quarter.
(Source: Wen Wei Po; Journalist: Winnier Chou; English Editor: Darius)
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