Tencent Buys 15% of JD To Take Down Their Common Foe Alibaba.
Two of the biggest Chinese Internet giants seem to be at it again. E-commerce company Alibaba, one of the better known company’s known in China, mostly because of its closeness with yahoo, and its often discussed pending IPO, While Tencent is best know for their parent company WeChat, which currently is one of the most popular messaging platform in China, nearing a 300 million monthly active users.
While Alibaba has total domination of its territory, with nearly 80% of China Internet shopping market under its control, Tencent has managed to a make a move that will the company right on its own turf, by partnering up with one of Alibaba’s biggest rivals.
The Announcement and Deals.
Tencent has recently announced on Sunday, they managed to form a partnership with Chinese online direct sales company JD.com. The deal is “aimed at providing superior e-commerce services to mobile and Internet users in China.” This deal is for Tencent to take 15% stage in JD, as well as another 5% when JD decide to go public.
The company managed to file for an IPO worth $1.5 billion back in January.Tenceint will gain a hold of 15% of JD upon closing the deal of this transaction. Additionally, Tencent will subscribe at IPO price for another 5% of JD on a post-IPO basis. This subscription is expected t close with JD’s IPO.
JD will also be acquiring interests in Tencent’s marketplace business. QQ wanggou B2C and PaiPai C2C. It will also acquire personnel in logistics and assets, and a minor claim in Yixun, which will grant them the right to acquire any remaining claim of Yixun in the future.
Tencent will also support JD’s growth in part of this strategic cooperation, in the physical goods, ecommerce business by offering access points in Weixin and Mobile QQ, and any other support key platforms to JD. Both companies will be cooperating on online payment services to improve the customers online shopping experience.
“Through this strategic partnership with Tencent in key areas, such as mobile access points, traffic support and eCommerce activities, we hope to enhance our ability to provide high quality and enjoyable shopping experience to a broader and growing user base while strengthening our direct sales and marketplace businesses on mobile and Internet,” Richard Liu, founder, Chairman and CEO of JD.com, said in a statement.
The President of Tencent, Martin Lau, has been announced in joining JD’s Board of Directors.