China’s Great Wall of e-Commerce Just Got a Whole Lot Bigger with Wanda Deal

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China’s Great Wall of e-Commerce Just Got a Whole Lot Bigger with Wanda Deal

Posted by Sheila Shayon on August 29, 2014 01:06 PM

Three Chinese billionaires are partnering to take on Alibaba as it prepares for what may be the largest IPO ever.

Wanda Group, China’s largest commercial land developer, Tencent Holdings and Baidu, will create a 5 billion yuan ($813 million) joint venture e-commerce company, "Wanda E-Commerce Company" that Wanda will control 70 percent of. The venture marries Tencent’s WeChat social messaging network, Baidu’s search engine prowess and Wanda’s 40 hotels, 49 commercial holdings and 40 department stores in a Chinese market that is already home to the world's biggest e-commerce operations, which are projected to hit $395 billion by 2015

“It’s a very interesting battle to watch—three top rich people join hands to challenge another bigger billionaire,” Cao Lei, director of the China E-Commerce Research Center, told Bloomberg. “The new venture will not be an immediate challenge to Alibaba. Rome can’t be built in a day.”

Indeed, Alibaba is a lot to reckon with. In the last quarter, the company's income rose to $1.1 billion, 42 percent higher than Amazon and eBay combined for the same period. Jack Ma, Alibaba’s founder, is China’s richest person with $21.8 billion, according to the Bloomberg Billionaires Index.

The new joint venture, which will be headed up by Dong Ce, co-founder of online shopping site Jiapin.com, will become the world’s largest O2O (online-to-offline) e-commerce platform. “O2O is the biggest pie in e-commerce … this is just the beginning," said Wang Jianlin, chairman of Wanda.

“The three partners will further deepen collaboration on initiatives such as traffic sharing, media and advertising resources sharing, membership benefits, payment and internet finance, big data, etc.,” Tencent said. And while e-commerce may be the main focus, all brands involved have their hands in several major industries, from film and entertainment to gaming and publishing.

In 2012, Wanda paid $2.6 billion for AMC Entertainment and last year brought A-list Hollywood celebs Nicole Kidman, John Travolta and Leonardo DiCaprio to China to announce plans for a massive $8 billion movie theme park in the city of Qingdao. However, Alibaba remains the one to beat with 29 deals totaling $16 billion since 2012, including a 10 percent stake in Singapore Post, Youku Tudou, Intime Retail Group and TangoMe. In July, the company struck a deal with Lions Gate Entertainment for a Chinese video streaming service.

“Alibaba still has huge potential for making money, mostly because of its mobile platform,” Li Muzhi, analyst at Arete Research Service, told Bloomberg. Smartphone users rose to 188 million in June, up from 163 million in March and mobile transactions accounted for 32.8 percent of Alibaba’s total in the June quarter, up from 27.4 percent in the previous three months.


China’s Great Wall of e-Commerce Just Got a Whole Lot Bigger with Wanda Deal

 

[cirr]

August 29, 2014, 11:48 AM

A Chinese real estate and retail conglomerate invests in e-commerce

BY DON DAVIS Editor in Chief

Dalian Wanda Group, which operates department stores and shopping centers in China, forms a joint venture with Chinese Internet giants Tencent and Baidu.

The explosion of online shopping in China has gotten the attention of one of the country’s biggest operators of offline department stores, hotels and shopping malls.

Beijing-based Dalian Wanda Group announced today a joint venture with two of China’s biggest Internet companies, leading search engine Baidu Inc. and gaming and messaging powerhouse Tencent Holdings Ltd., on a joint venture with $814 million in initial capital. Wanda will hold a 70% stake and Tencent and Baidu 15% each.

The focus of the joint venture is to tie together the Internet and bricks-and-mortar stores, a connection often referred to as O2O—online to offline—in China.

“The integration of online and offline business is an inevitable trend in the development of the e-commerce industry,” Dong Ce, the CEO of the new joint venture said in a statement announcing the project. He said the joint venture, called Wanda E-commerce Company for now, will be “the world’s largest O2O platform.”

The three companies say they will work together to develop payment and e-commerce financial products and a loyalty program, and that they will jointly share data and work together on sharing Wi-Fi resources, which could make it easier for consumers with smartphones to access web-based content while in Wanda properties.

Wanda operates 83 department stores in China and projects by 2015 it will have 125 stores covering 334 million square meters. It also operates 93 Wanda Plaza developments that include commercial properties, office space, luxury hotels and apartments.

All of Wanda’s commercial centers, hotels and resorts will be equipped with e-commerce services by 2015, said Dong, who also predicted membership in Wanda’s e-commerce service will exceed 40 million this year and 100 million in 2015. He said in the statement that a “very cool new name” for the joint venture will be announced shortly.

The announcement represents another step by Tencent and Baidu to ally themselves against Alibaba Group Holding Ltd., China’s dominant e-commerce company. Tencent invested nearly $215 million earlier this year to acquire a 15% stake in JD.com(Tencent invests in JD.com Top 500 Chinese E-Retailers - China’s largest e-retailer pairs up with online powerhouse Tencent - Internet Retailer Alibaba’s biggest rival and the No. 1 online retailer in the Internet Retailer China 500. (Alibaba is not ranked because, like eBay, it is not itself a retailer but rather the operator of an online shopping portal.)

Baidu bought a majority stake in group-buying site Nuomi last year, putting it in direct competition with Alibaba. The two companies have been long-time rivals. Alibaba does not allow Baidu spiders to crawl Alibaba marketplaces Taobao and Tmall, instead forcing consumers to go to those shopping sites to see what’s on offer rather than starting their shopping trips on Baidu.

Alibaba also has positioned itself to combine online and offline shopping. The company, which has announced plans to go public on the New York Stock Exchange this year, invested $692 million this year in InTime Retail Group, which operates 36 department stores in China.

The competition among these rich and rapidly growing Chinese companies took on another dimension this week with the release of the latest Bloomberg Billionaires Index, which listed Alibaba founder Jack Ma as China’s wealthiest man, with net worth of $21.8 billion. No. 2 was Ma Huateng, chairman of Tencent, with wealth estimated at $5.5 billion, followed by Baidu founder Robin Li. However, according to Forbes magazine, Wanda founder Wang Jianlin is worth $15.8 billion. Wanda’s holdings outside of China include the AMC movie chain in the United States, which the Chinese company purchased for $2.6 billion in 2012.


Top 500 Chinese E-Retailers - A Chinese real estate and retail conglomerate invests in e-commerce - Internet Retailer

 

[Aepsilons]

Seems like my investment will pay off..soon.