Partnerships / Acquisitions

Tencent Partners For 'Smart Retail'

The Chinese real estate giant Dalian Wanda Group is creating a joint venture with Tencent, one of China's biggest technology companies and the former local unit of Groupon, in order to join together online and offline businesses.

Reuters reported the deal is part of the companies' push into the world of so-called "smart retail," in which consumers can make purchases in physical stores with an integration of online and offline data. The Wanda Commercial Management Group will have a 51 percent stake in the joint venture, while Tencent will hold 42.48 percent. Groupon's former local unit, Gaopeng – which is now backed by Tencent – will hold the remaining stake.

Wanda's existing internet businesses will be merged into the joint venture, with Tencent providing online traffic. Gaopeng's electronics invoicing business will also be part of the new venture. The group is aiming to overhaul the offline stores while also driving online traffic via WeChat and its other platforms.

The move on the part of Tencent comes at a time when it is in a fierce battle with Alibaba, China's leading eCommerce player. As a result, they have been pouring money into the retail sector, with CNBC recently reporting that the two have invested more than $10 billion in retailers since the beginning of 2017, leading retailers to take sides.

“All of the retailers in the brick-and-mortar world are very worried,” Jason Yu, Shanghai-based general manager of market research firm Kantar Worldpanel, told CNBC. “They have to take a side. Otherwise, they are afraid they will be eaten alive in the future.”

The push is driven by the large cash piles and rising share prices of Alibaba and Tencent. As a result, the companies are locked in a race to get consumers and merchants to join their payment, logistics, social media and Big Data platforms.

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