Tencent Holdings Ltd (HKG:0700) (OTCMKTS:TCEHY) has appointed Barclays PLC (NYSE:BCS) (LON:BARC) for possible purchase of a stake in JD.Com Inc., reports The Wall Street Journal.
The operational tie-up between the Chinese social networking company and the e-commerce firm could create a strong competitor to Alibaba.
Tencent Holdings: Tie-up could create competitor for Alibaba
According to The Wall Street Journal report, the operational tie-up between the Chinese social networking and gaming company Tencent Holdings Ltd and the Chinese online retailer and e-commerce firm JD.Com could create a strong competitor to Alibaba.
Tencent Holdings Ltd (HKG:0700) (OTCMKTS:TCEHY)’s presence in e-commerce is small compared with rival Alibaba. However if the proposed operational tie-up with JD.com fructifies, Tencent could be made a bigger player.
Rumors have been spreading that Tencent is keen to enhance its flagging e-commerce operations. JD.com, formerly called 360Buy, is China’s second largest e-store and the closest rival in terms of market share to Alibaba’s Tmall. The proposed arrangement between Tencent and JD.com would offer more leverage to Tencent to counter Alibaba’s challenge.
Despite having its own QQ Buy and 51Buy e-stores, Tencent Holdings Ltd (HKG:0700) (OTCMKTS:TCEHY) has been struggling in its e-commerce ventures, though it has proven credentials in other areas like social media and gaming. It is felt that if the proposed deal fructifies, one or both of those e-stores of Tencent could be subsumed into JD.
Flurry of deals in Chinese Internet companies
Alibaba owns and operates Taobao Marketplace, China’s largest consumer e-commerce website, business e-commerce platform Alibaba.com Limited as well as Alipay, an online payment platform much like PayPal. Recently, Alibaba Group Holding Ltd announced its intention to beef up its resume in the digital mapping sector through acquisition of AutoNavi Holdings Ltd.
While Alibaba is the dominant player in most Internet-related sectors in Asia, the digital mapping sector is an exception to date. Analysts say this is just another move from Alibaba to try and move into the digital mapping sector controlled by Chinese rivals Tencent Holdings Ltd (HKG:0700) (OTCMKTS:TCEHY) and Baidu Inc (ADR) (NASDAQ:BIDU).
Tencent Holdings Ltd (HKG:0700) is best known for its WeChat messaging service, which boasts of over 272 million monthly active users, largely in China. As of September, JD.com had 35.8 million active customer accounts. The proposed tie-up could turn WeChat’s large user base into a platform for offering other services such as mobile shopping. Moreover, the partnership with JD.com could facilitate Tencent with more resources in running e-commerce operations.