14 DAY TRIAL // If you thought the battle between Amazon and other e-commerce players in the US was nasty, you should see how things are going in China. Two Chinese giants, namely Tencent and Baidu, have decided to team up to fight against Alibaba.
According to the announcement, Tencent, Baidu and conglomerate company Dalian Wanda, which has business in real estate, tourism, hotels and entertainment, are teaming up. In the next three years, a new e-commerce company will be built following investments of CNY5 billion, which equals roughly $814 million (€617.5 million). In the first year, the new site will swallow up about $163 million (€123.6 million) of the sum.
Wanda will own 70 percent of the joint venture, while the other two companies will hold 15 percent each.
The Next Web reports that the new e-commerce company will focus on online-to-offline (O2O) service. Tencent told the publication that the new effort shows the company’s struggle to expand its O2O ecosystem and to deliver “superior experiences” to users by connecting them with goods, services and businesses.
From here on out, the three companies will work on other initiatives too, such as sharing traffic, media and advertising resources. Mainly, however, they’ll be competing for a larger slice of the e-commerce market in China, which has been expanding rapidly in recent years. It has become, in fact, the largest market of the kind in the entire world.
Estimates indicate that the online retail sales figures will grow by 45.8 percent this year, to about $446.6 billion (€338.8 billion).
The partnership will help Tencent as it promotes its online payment platforms, namely TenPay and Weixin Payment, competitors of Alipay, another Alibaba product. In fact, the two payment solutions will be the preferred method for transactions across all of Wanda’s businesses.
Wanda e-commerce will launch such services in all 107 Wanda Plazas by the end of the year.
By 2015, all these locations, as well as hotels and resorts under the conglomerate will be equipped with e-commerce services. Estimates indicate that Wanda e-commerce membership will exceed 40 million this year and could increase to over 100 million by next year. All the company’s properties are expected to draw in over 5 billion consumers annually by 2010, which would turn it into the largest online commerce platform.
The deal will be signed in a special ceremony in Shenzen, which will establish the “Wanda E-commerce Company,” the joint venture which will be registered in Hong Kong.