There's little doubt that Alibaba ( BABA -3.95% ) is a force to be reckoned with in China, but the company is facing choppy seas these days as the result of comments made by co-founder Jack Ma. In a speech in October, he criticized regulators, and Beijing was swift to respond.
Alibaba's spinoff of Ant Group was unceremoniously shelved, execs of both entities were called to appear before regulators, and Alibaba has been the subject of an antitrust investigation. As a result, Ma has been avoiding the spotlight for more than two months now, leading some to initially believe he was missing.
Investors looking to invest in e-commerce in China without all the drama should consider JD.com ( JD 1.27% ).
JD.com is China's largest online retailer by revenue, while Alibaba is more of a reseller. JD was the undisputed winner between the two in 2020, and while Alibaba climbed 10%, JD.com's stock soared 150%.
JD's results were driven by significant customer growth, as more than 100 million customers joined its e-commerce platform last year, bringing the total to 442 million. This drove third-quarter revenue up 29%, while net income increased more than 1,000%. Even more importantly, free cash flow soared 120-fold.
The company, referred to as the "Amazon of China," has a program similar to Amazon Prime: JD Plus. This paid-subscriber program has more than 20 million members that receive exclusive discounts, cheaper shipping, and expanded customer service.
JD.com's scale, combined with its logistics and delivery network, helped the company meet the unprecedented surge in e-commerce demand resulting from the pandemic. JD.com is expanding its reach, with more than 80% of new users coming from more-rural areas of the country.
Investors get more than just e-commerce when they put their money to work in JD. The company is looking to spin off several of its fastest-growing businesses, while still retaining majority control. These include JD Digits (its fintech offering), JD Logistics, and JD Health, which combines telehealth services with pharmaceutical products.
Given the breadth of its opportunity, investors should consider an investment in JD.com.