China's Tencent, invest $863 million in online retailer Vipshop

Business Monday 18/December/2017 13:35 PM
By: Times News Service
China's Tencent, invest $863 million in online retailer Vipshop

Beijing: Chinese Internet giant Tencent Holdings said on Monday it would lead an $863 million investment in apparel platform Vipshop Holdings, upping its rivalry in retail with Alibaba Group Holding.
Tencent will invest $604 million in exchange for a 7 per cent stake in Vipshop, while e-commerce firm Inc (JD.O) will invest $259 million for a stake of 5.5 per cent — rising from a previously undisclosed stake of roughly 2.5 per cent — the two firms said in a statement.
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.
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, who have made competing investments in areas as diverse as bike-sharing apps, food delivery and gaming.
“Right now in the Chinese market we have two internet powers,” said Weiwen Han, managing partner for Greater China at Bain & Company. “Investments will either fall into the Alibaba or Tencent camp.”
He added, however, that such deals were difficult to turn into successful ventures.