China’s largest online direct sales company, Jingdong, and Tencent, the country’s top internet company have cozied up after weeks of speculation that the two might be an item.
The two companies announced Monday that Tencent will buy a 15-percent stake in JD for more than 210 million US dollars while Jingdong will run three of Tencent’s e-commerce branches. Feng Xin examines what many are calling a "strategic partnership" between the internet giants.
Jingdong will take over Tencent’s B2C platform QQ Wanggou and C2C marketplace Paipai. It will also acquire full interest in Tencent’s logistics department as well as a small share in Icson, Tencent’s flagship online shopping mall.
From Tencent’s side, the company will offer access to Jingdong on its hugely popular social network sites, WeChat and Mobile QQ. Tencent plans to pick up an additional 5 percent of Jingdong’s stake once it goes public. Tencent President Martin Lau also will take a seat on Jingdong’s board.
"For Tencent, it has not only gotten rid of its unsuccessful e-commerce departments but also created new business opportunities for its emerging Wechat service. For Jingdong, it will get more traffic and business through Tencent’s massive mobile social network service. It’s a valuable partnership for both sides." Xiang Ligang, General Secretary of 3G Industry Associations said.
The Tencent-Jingdong partnership comes ahead of Jingdong’s planned 1.5-billion-dollar public listing in the United States, while Tencent is seeking to monetize its 600-million-user WeChat platform .
Jingdong currently controls one-fifth of China’s e-commerce market. Its competitor, Alibaba, remains the big boy on the block with a market share of more than 50%.