(*)

In the third quarter of 2021, the Group conducted impairment assessments on its investment in Yonghui considering the duration and severity of the decline of Yonghui’s stock price after the investment, and concluded the decline in fair value of the investment was other-than-temporary. Accordingly, the Group recorded impairment charges of RMB1,492 million, to write down the carrying value of its investment in Yonghui to its fair value, based on quoted closing prices of Yonghui as of September 30, 2021.

(**)	As of December 31, 2021, the weighted average remaining life of the intangible assets not included in Yonghui’s consolidated financial statements was 14 years.

As of December 31, 2020 and 2021, the market value of the Group’s investment in Yonghui was RMB8,723 million and RMB4,921 million based on its quoted closing price, respectively.

Investment in Dada

Prior to 2019, the Group acquired ordinary shares and preferred shares of Dada for total consideration of RMB5,723 million with a combination of RMB3,513 million in cash, the Group’s a series of

future

services arrangements commenced from 2016, including supply chain support for a period of 10 years, traffic and other additional support for a period of 7 years,

non-compete

obligation for a period of 7 years from 2016 and the Group’s O2O business, JD Daojia. On June 5, 2020, Dada completed its initial public offering on the Nasdaq Stock Market (“Dada IPO”). Concurrently with Dada IPO, the Group converted its preferred shares investment in Dada to ordinary shares in entirety. In addition, the Group subscribed for additional ordinary shares of Dada with cash consideration of RMB703 million

in 2020

. The Group’s interest in Dada was diluted to approximately 46

% and

a deemed disposal gain of RMB5,229 million

was

recognized in “shares of results of equity investees” in the consolidated statements of operations and comprehensive income/(loss

) for the year ended December 31, 2020.

Dada is China’s leading local

on-demand

delivery and retail platform. The investment in Dada’s ordinary shares was accounted for using the equity method as the Group obtained significant influence by the rights to nominate three board members out of nine.

The investment in Dada is accounted for using the equity method with the investment cost allocated as follows:


	As of December 31,
	2020			2021

	(RMB in millions)
Carrying value of investment in Dada’s ordinary shares		7,280			6,075
Proportionate share of Dada’s net tangible and intangible assets		3,336			2,136

Positive basis difference		3,944			3,939

Positive basis difference has been assigned to:
Goodwill		3,893			3,893
Amortizable intangible assets (*)		68			61
Deferred tax liabilities		(17	)		(15	)

		3,944			3,939

(*)	As of December 31, 2021, the weighted average remaining life of the intangible assets not included in Dada’s consolidated financial statements was 4 years.

As of December 31, 2020 and 2021, the market value of the Group’s investment in Dada was RMB25,846 million and RMB9,106

million based on its quoted closing price, respectively.

Investment in JD Technology

As disclosed in Note 6 — “JD Technology reorganization”, investment in JD Technology has been accounted for using the equity method subsequent to June 2020.

In June 2020, the Group entered into agreements with JD Technology, pursuant to which the Group has acquired an aggregate of 36.8% equity interest in JD Technology by converting the profit sharing right and investing additional RMB1.78 billion in cash in JD Technology. Upon the completion of the acquisition of JD Technology’ equity interests, the investment in JD Technology is accounted for using the equity method. In March 2021, the Group transferred JD Cloud & AI with investing additional RMB4 billion in cash in exchange of

ordinary shares

in JD Technology, and the Group’s equity interest in JD Technology increased to approximately 41.7%. As the Group and JD Technology are both controlled by Mr. Richard Qiangdong Liu before and after the acquisition of JD Technology’ equity interests, the acquisition is considered to be a transaction under common control. Pursuant to ASC

805-50-25-2,

the Group recorded the investment in JD Technology amounting to RMB7.43 billion and RMB2.62

billion in 2020 and 2021, respectively, based on its proportioned net assets of JD Technology. The difference between consideration transferred and the carrying amounts of the net assets received, which was an increase of

RMB5.65 billion into additional paid-in capital and a decrease of RMB901

million into additional paid-in capital has been recorded for the years ended December 31, 2020 and 2021, respectively.

Investment in ATRenew

Pre-IPO

investment in ATRenew

Prior to 2018, the Group acquired preferred shares of ATRenew for total consideration of

RMB359

million. In June 2019, the Group signed series of agreements with ATRenew, merged its Paipai Secondhand business into ATRenew with certain exclusive traffic resources for the

next 5 years, and additionally invested RMB139

million in cash in exchange for an additional preferred shares investment in ATRenew. Total consideration for the above investment in ATRenew was

RMB3,381

million. In 2020 and 2021, the Group completed further investment in preferred shares of ATRenew for a cash consideration of

RMB401 million and RMB129

million, respectively. ATRenew is a leading technology-driven

pre-owned

consumer electronics transactions and services platform in China, the investment in ATRenew’s preferred shares is accounted for under the Measurement Alternative as the underlying preferred shares were not considered

in-substance

common stock and had no readily determinable fair value.

Post-IPO

investment in ATRenew

On June 18, 2021, ATRenew completed its initial public offering on the Nasdaq Stock Market (“ATRenew IPO”), upon which the preferred shares investment in ATRenew were converted to ordinary shares in entirety. Pursuant to ASU

2020-01,

the Group remeasured its previously held interest based on the observable price in orderly transactions and recorded a gain from fair value change

of RMB2,305

million in others, net in the consolidated statements of operations and comprehensive income/(loss) for the year ended December 31, 2021. Concurrently, the Group subscribed ad

ditional 2,333,333

ordinary shares of ATRenew with cash consideration

of RMB321

million. Upon the offering, the Group held approximatel

y 33% o

f ATRenew’s issued and outstanding shares and

had two out of seven

board seats. Accordingly, investment in ATRenew’s ordinary shares was accounted for using the equity method as the Group obtained significant influence. In December 2021, the Group

purchased

for additional ordinary shares of ATRenew with cash consideration of

RMB41 million.

The investment in ATRenew is accounted for using the equity method with the investment cost allocated as follows:


	As of December 31,
	2021
	(RMB in millions)
Carrying value of investment in ATRenew’s ordinary shares		2,832
Proportionate share of ATRenew’s net tangible and intangible assets		2,209

Positive basis difference		623

Positive basis difference has been assigned to:
Goodwill (*)		35
Amortizable intangible assets (**)		784
Deferred tax liabilities		(196	)

		623

(*)

In the fourth quarter of 2021, the Group conducted impairment assessments on its investment in ATRenew considering the duration and severity of the decline of ATRenew’s stock price after the investment, and concluded the decline in fair value of the investment was other-than-temporary. Accordingly, the Group recorded impairment charges of

RMB3,909

million, to write down the carrying value of its investment in ATRenew to its fair value, based on quoted closing prices of ATRenew as of December 31, 2021.

(**)	As of December 31, 2021, the weighted average remaining life of the intangible assets not included in ATRenew’s consolidated financial statements was 8 years.

As of December 31, 2021, the market value of the Group’s investment in ATRenew

was RMB2,832 million based on its quoted closing price.

The Group recorded its interests in Yonghui, Dada, JD Technology and ATRenew one quarter in arrears to enable the Group to provide its financial disclosure independent of the reporting schedule of these equity investees.

The Group summarizes the condensed financial information of the Group’s equity investments under equity method as a group below in accordance with Rule

4-08

of Regulation

S-X:


	For the year ended December 31,
	2019			2020		2021

	(RMB in millions)
Revenues		128,942			140,263		145,582
Gross profit		34,541			45,590		39,736
Income/(loss) from operations		(534	)		5,157		1,877
Net income/(loss)		(565	)		2,680		(250	)
Net income/(loss) attributable to ordinary shareholders		(1,235	)		3,292		675


	As of December 31,
	2020		2021

	(RMB in millions)
Current assets		129,535		150,304
Non-current assets		97,110		140,872
Current liabilities		97,669		109,790
Non-current liabilities		17,371		49,919
Non-controlling interests		1,119		973

The Group performs impairment assessment of its investments under the Measurement Alternative and equity method whenever events or changes in circumstances indicate that the carrying value of the investment may not be fully recoverable. Impairment charges in connection with the equity method investments of RMB797 million, RMB488 million and RMB5,514

million were recorded in “share of results of equity investees” in the consolidated statements of operations and comprehensive income/(loss) for the years ended December 31, 2019, 2020 and 2021, respectively. The valuation of impairment in privately held companies under the Measurement Alternative is discussed in Note 5 — “Fair value measurement”.