Google is investing $550 million in JD.com, China’s second-largest online retailer.

The strategic partnership will see Google’s investment rewarded with 27 million newly-added class A ordinary shares in JD.com, a less than 1% stake in the company. Beyond the cash investment, the deal will include the promotion of JD goods on Google’s shopping service and a mutually beneficial combination of Google’s market reach and analytical capabilities with JD.com’s expertise in logistics and inventory management.

Both companies have strong reasons to enter a partnership with one another. Here’s why.

To beat their rivals

The partnership with Google will help JD.com launch a serious campaign to unseat Alibaba, China’s largest…