Dragon duel: Tencent and Baidu rope in top realtor Wanda to take on Alibaba
30 Aug 2014 4:25 AM IST
China's biggest property developer Wanda Group has announced that it will set up an e-commerce joint (JV) venture at a cost of over $800 million with two Internet giants, Baidu and Tencent, in a challenge to industry leader Alibaba Group ahead of its debut in the United States stock market. The three companies will initially invest 5 billion yuan ($814 million) and the investment will reach 20 billion yuan within five years, Wanda Chairman Wang Jianlin said during the contract-signing ceremony.
Wanda will hold a 70 per cent stake in the joint venture, the name of which is still unknown, while Baidu and Tencent will hold 15 per cent each, state-run Xinhua news agency reported. The e-commerce company will be registered in Hong Kong and after a test run this year, its online services will be formally launched next year.
Alibaba, the largest e-commerce company of the world’s second largest economy, is poised to launch what is potentially the world's largest ever technology initial public offering (IPO) in the United States of America. Analysts say that the initial public offering is likely to value Alibaba at between $150 billion and $200 billion.
Alibaba founder Jack Ma, whose assets have been valued at $21.8 billion, is regarded as China's richest man. He is $5.5 billion richer than Ma Huateng, the founder of Tencent Holdings. Robin Li, founder of search engine Baidu, ranks third. Wanda owns 94 Wanda Plazas and 60 luxury hotels in China.
Tencent, China's largest Internet company by market value, and Baidu, China's largest search engine, have both forayed into that country’s online retail space in the past but neither have managed to crack Alibaba's hold over the fast growing Chinese e-commerce market.
Alibaba had a gross merchandise volume of $248 billion in 2013 on its three major trading platforms, accounting for 78.5 per cent of the country's online retail market, says a report by market information provider Analysys International.
The alliance of the three most powerful private companies in China is widely seen as an approach to challenge Alibaba's dominant position in the e-commerce market. ‘The online-offline integration is an inevitable trend for future business terminals and e-commerce companies,’ said Dong Ce, chief executive officer of the joint venture. Tencent's vast number of users is a cutting-edge for the new venture. Wanda hopes these users will become customers at its shopping malls, movie theatres and hotels through this new e-commerce platform.
Till June, monthly active users on Tencent's QQ instant messaging service reached 829 million while its mobile social platform Wechat boasted 438 million active users. The tie-up with the two IT giants will turn Wanda into the world's largest online-to-offline (O2O) platform, according to Dong.
Wanda will launch e-commerce services in all 107 Wanda Plazas, including those scheduled for opening, by the end of 2014. By 2015, all Wanda plazas, hotels and resorts will be equipped with e-commerce services, said Dong, predicting the Wanda e-commerce membership will exceed 40 million this year and 100 million next year.
Xue Shengwen, a senior researcher with industry research firm CIConsulting, said that the O2O is a market that Alibaba has yet to tap and is worth trillions of yuan. The alliance of the three giants will change the landscape of China's e-commerce market, Xue added.
China is the world's most populous Internet market, with more than 600 million people online. Consulting firm McKinsey has said that online shopping might triple from 2011 levels to $400 billion a year by 2015.
Wanda will hold a 70 per cent stake in the joint venture, the name of which is still unknown, while Baidu and Tencent will hold 15 per cent each, state-run Xinhua news agency reported. The e-commerce company will be registered in Hong Kong and after a test run this year, its online services will be formally launched next year.
Alibaba, the largest e-commerce company of the world’s second largest economy, is poised to launch what is potentially the world's largest ever technology initial public offering (IPO) in the United States of America. Analysts say that the initial public offering is likely to value Alibaba at between $150 billion and $200 billion.
Alibaba founder Jack Ma, whose assets have been valued at $21.8 billion, is regarded as China's richest man. He is $5.5 billion richer than Ma Huateng, the founder of Tencent Holdings. Robin Li, founder of search engine Baidu, ranks third. Wanda owns 94 Wanda Plazas and 60 luxury hotels in China.
Tencent, China's largest Internet company by market value, and Baidu, China's largest search engine, have both forayed into that country’s online retail space in the past but neither have managed to crack Alibaba's hold over the fast growing Chinese e-commerce market.
Alibaba had a gross merchandise volume of $248 billion in 2013 on its three major trading platforms, accounting for 78.5 per cent of the country's online retail market, says a report by market information provider Analysys International.
The alliance of the three most powerful private companies in China is widely seen as an approach to challenge Alibaba's dominant position in the e-commerce market. ‘The online-offline integration is an inevitable trend for future business terminals and e-commerce companies,’ said Dong Ce, chief executive officer of the joint venture. Tencent's vast number of users is a cutting-edge for the new venture. Wanda hopes these users will become customers at its shopping malls, movie theatres and hotels through this new e-commerce platform.
Till June, monthly active users on Tencent's QQ instant messaging service reached 829 million while its mobile social platform Wechat boasted 438 million active users. The tie-up with the two IT giants will turn Wanda into the world's largest online-to-offline (O2O) platform, according to Dong.
Wanda will launch e-commerce services in all 107 Wanda Plazas, including those scheduled for opening, by the end of 2014. By 2015, all Wanda plazas, hotels and resorts will be equipped with e-commerce services, said Dong, predicting the Wanda e-commerce membership will exceed 40 million this year and 100 million next year.
Xue Shengwen, a senior researcher with industry research firm CIConsulting, said that the O2O is a market that Alibaba has yet to tap and is worth trillions of yuan. The alliance of the three giants will change the landscape of China's e-commerce market, Xue added.
China is the world's most populous Internet market, with more than 600 million people online. Consulting firm McKinsey has said that online shopping might triple from 2011 levels to $400 billion a year by 2015.
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