Dalian Wanda Group has joined forces with Internet leaders Baidu and Tencent to create a new online-to-offline e-commerce venture. The deal unites three of China's most powerful non-governmental companies.
China's property conglomerate Dalian Wanda Group is setting up a 5-billion-yuan ($814 million, 618 million euros) e-commerce platform with Internet majors Baidu and Tencent to rival Alibaba's dominance in the country's online market.
Beijing-based Dalian Wanda, one of China's largest commercial real estate developers, will hold a 70-percent stake in the Hong Kong-registered joint venture, referred to now as Wanda e-commerce, the company announced Friday . Baidu, China's largest search engine, and Tencent, Asia's largest listed technology company, will take 15 percent each.
Dalian Wanda chairman Wang Jianlin added total funding in the project could reach 20 billion yuan within five years.
The deal points to the intense competition China's Internet industry faces as the two tech giants try to break into the country's online payment and e-commerce markets.
New service spectrum
The new entity aims to integrate Wanda's offline retail business with search, location and communication services offered by Baidu and Tencent to build an online-to-offline (O2O) platform, according to Wanda.
O2O e-commerce involves people using smartphones to search the Internet for goods and services, often nearby in stores.
The tie-up with the two IT giants will elevate Wanda to become the world's largest O2O platform, said Dong Ce, chief executive of the new venture.
The three partners will share traffic, media, user and membership systems and advertising resources, among other initiatives.
Although Wanda denied the new platform was intended to challenge existing e-commerce operators, China's online shopping market - the biggest in the world - is dominated by Alibaba, which transacts more goods than Amazon and eBay combined. The Hangzhou-based Internet leader is also quickly boosting its mobile ecommerce and O2O offerings.
Wanda's Dong predicted the new e-commerce platform would attract more than 40 million customers this year and surpass 100 million the following year.
'Just the beginning'
Wang is the richest man on mainland China with a net worth of $16 billion, owning 75 department stores, 85 shopping plazas and 51 five-star hotels, according to his Forbes profile .
In 1989, he became chairman of Wanda, which under his leadership acquired US movie theater chain AMC in 2012 and British yacht maker Sunseeker in 2013.
"O2O is the biggest pie in e-commerce… this is just the beginning," said Wang.
His company plans to set up e-commerce services in its 107 commercial real estate properties throughout the country this year and expand to all of its shopping malls, hotels and holiday resorts by 2015.
el/hg (AFP, Reuters)