Tencent bags 15% stake in JD.com

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Tencent Holdings, one of China’s leading Tech Companies, today announced acquisition of 15 percent stake in a local e-commerce website JD.com in order to give a tough competition to the current online shopping giant, Alibaba.

As part of the $214.7 million strategic partnership agreement JD.com will take hold of Tencent’s own, unsuccessful e-commerce businesses, including Tencent Digital, Tencent E-Commerce, Yixun Logistics and Tencent Guangzhou.

In the meantime, Tencent said it would integrate its hugely popular WeChat mobile messaging app, known as Weixin in China, with JD.com and offer priority access points to the e-commerce firm in its chat platforms. WeChat has an active user base of around 272 million.

The deal will also see Tencent acquiring an additional 5 percent of JD.com on a post-IPO basis with the company’s President Martin Lau taking a seat on JD.com’s board of directors.

Tencent President, Martin Lau, said: “Our strategic partnership with JD will not only extend our presence in the fast-growing physical goods e-commerce market, but also allow us to better develop our enabling services such as payment, public accounts and performance-based advertising network to create a more prosperous ecosystem for overall e-commerce activities on our platforms.”

Collaboration between these two companies will not only give a stronger push to e-commerce on WeChat, but will also seek to improve the online shopping experience of customers.

It will be interesting to note whether the partnership will appear as a threat to China’s current e-commerce leader Alibaba which plans to go public in 2014.

[Source: Reuters]