Tencent, JD.com come together to re-shape e-commerce in China

Tencent will be providing mobile strategy via WeChat for JD.com e-commerce business to compete with Alibaba in return for IPO shares

In a landmark strategic partnership, Tencent announced that it will buy a 15 percent stake in China’s No 2 e-commerce firm JD.com for $214.7 million. This is meant to threaten rival Alibaba with Tencent’s QQ and WeChat applications.

As part of the agreement, JD will take control of Tencent’s e-commerce businesses Yixun, Wanggou B2C and PaiPai C2C marketplace. Both parties will also cooperate on online payment services to improve online shopping experience for users. In addition, Tencent’s president Martin Lau will join the JB’s board of directors.

According to the third quarter results announced by Tencent in November last year,  QQ has 816 million monthly active users while Weixin and WeChat have a combined 272 million monthly active users.

Also Read: Tencent invests US$193M to acquire 9.9% stake in China South City

In return, JD will issue new shares to Tencent. Upon closing the transaction, Tencent will own 15 per cent of JD. Furthermore, Tencent will subscribe at IPO price for an additional five per cent of JD on a post-IPO basis.

Martin Lau, President of Tencent, said that their strategic partnership with JD will not only extend their presence in the fast-growing physical goods eCommerce market, but also allow them to build better e-commerce systems for their platforms.

Theon is a skeptic who believes in possibilities after learning that three thirds of a pie does not add up to one and that cats can be dead and alive at the same time. He writes about business and technology, and is particularly interested in deconstructing complex ideas into bite-sized chunks. His favorite novel is The Little Prince, and spends his free time on chess and video games.

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