Wanda Group and Tencent want to destroy Alibaba in the Chinese ecommerce Market
China Dalian Wanda Group and Tencent Holdings Ltd. (0700.HK) said Friday that they would establish a 5 billion yuan ($ 814 million) e-commerce joint venture with Baidu Inc (BIDU.O), as companies push the high growth of e-commerce sector.
The joint venture, which will be registered in Hong Kong, will be 70 percent owned by the private company Wanda, while Chinese Internet giants Baidu and Tencent will hold 15 percent, respectively, Wanda and Tencent said in separate statements.
China is the largest market for e-commerce world, with its No. 1 player, Alibaba Group Holding Ltd transactions more goods from Amazon.com Inc (AMZN.O) and eBay Inc (EBAY . O) combined.
By partnering with Tencent and Baidu, Wanda will become the biggest platform online-offline for electronic commerce in the world, said Dong Ce, the chief executive of the new company. -Online-To offline, or O2O, involves people using their smartphones to find and buy goods and services, often physically close to them.
"O2O is the largest e-commerce pie ... this is just the beginning," said Wang Jianlin, chairman of Wanda and the richest man in China with a net worth of $ 16 billion, according to Forbes.
The alliance will also compete with Alibaba for a slice of the growing pie. The rival Tencent and Baidu is also rapidly expanding its offerings of e-commerce and mobile O2O.
In the April-June quarter, Alibaba mobile revenue was roughly a third of its total turnover, compared to 27.4 percent in the first three months of the year.
The agreement is structured in three years, Tencent said. The initial investment by the three companies will amount to 1000 million yuan, the company said.
"Within five years, the total investment will be around 20 billion yuan," Wang said. "We will bring new investors to increase cash flow." according to this ecommerceagency
Wanda, who bought the American cinema operator AMC Entertainment Holdings Inc (AMC.N) in 2012, is a conglomerate of commercial property, luxury hotel and cinema.
The Beijing-based company said the joint venture, which still has not called Wanda, but Wanda is referred to as electronic commerce, will launch the e-commerce services in its 107 commercial real estate properties across China this year.
In 2015, the cluster services have been established in all its malls, hotels and resorts, Wanda said.
LET'S GET Social
Social media and video games giant Tencent and Baidu, the dominant search engine in China, help build the alliance finances internet and payment of products, services, big data and customer account and affiliate systems.
For Tencent, the agreement will give them the opportunity to expand their online payment service in the new e-commerce company and Wanda existing properties, the company said.
"The three partners will further deepen collaboration in initiatives such as traffic exchanges, media and advertising resources sharing, benefits of membership, internet payment and financing, big data, etc," Tencent said.
Advantages of this alliance
This includes WeChat TenPay and Payment, which is linked to popular mobile messaging application WeChat, known as Weixin in China. WeChat more popular application of China had 438 million monthly active users by the end of June and has quickly become a digital Swiss army knife, capable of everything from messaging to purchase meals and book taxis.
Tencent also be able to expand its online video library, drawing from Wanda licensed content, including movies and television.
Baidu declined to comment on