Chinese internet giant Tencent Holdings (00700.HK) will lead an US$863 million investment in apparel platform Vipshop Holdings, upping its rivalry in retail with Alibaba Group.
Tencent will invest US$604 million for a 7 percent stake, while e-commerce firm JD.com, which already owns about 2.5 percent in Vipshop, will invest US$259 million to increase its stake to 5.5 percent, Reuters reports, citing the two firms.
The deal extends a recent push by Tencent into Alibaba’s home turf of retail, where the firm hopes to leverage its messaging service WeChat and its online payment systems to drive shopping demand, the news agency said.
Martin Lau, Tencent’s president, said the tie-up would bring Vipshop Tencent’s “audiences, marketing solutions, and payment support” to help tap China’s rising middle class. Tencent’s WeChat has nearly a billion users.
The looming retail battle reflects a wider, long-running stand-off between Tencent and Alibaba, which have made competing investments in areas as diverse as bike-sharing apps, food delivery and gaming.
Alibaba has been looking to reshape the battle lines of China’s online and offline market. Its Tmall and Taobao platforms dominate online retail and it has invested over US$10 billion in a push into brick-and-mortar stores.
Tencent, Asia’s most valuable company with a market capitalization of US$473 billion, plans to invest 4.2 billion yuan (US$634.8 million) for a 5 percent stake in supermarket operator Yonghui Superstores Co. Ltd. (601933.CN). It is already a major stakeholder in JD.com.
The latest deal, at a 55 percent premium to Vipshop’s closing share price on Friday, will help Tencent tap the firm’s young, female shoppers and give it access to reams of consumer and transaction data to help it compete with Alibaba’s Alipay.
JD.com’s chief executive, Richard Liu, said the move would help “expand the breadth and reach of our fashion business”.
Liu said last month around 100 Chinese apparel merchants had left its platform in the last quarter due to what he called “coercive” tactics by competing platforms.
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