Alibaba faces ecommerce challenge

1 September 2014

HONG KONG: Alibaba, the Chinese ecommerce giant that is soon to launch an initial public offering in New York, is about to face a new domestic challenge after the formation of an alliance between three major Chinese companies.

Dalian Wanda Group, the privately-owned real estate conglomerate, has announced that it is joining forces with Baidu, China's largest search engine, and internet company Tencent in an ecommerce partnership worth over $800m.

Wanda E-Commerce, the new joint venture, will be based in Hong Kong with the Wanda Group having 70% control while Baidu and Tencent will hold 15% each, the New York Times reported.

With an eye firmly on the online-to-offline opportunities presented by such an alliance, the three companies plan to establish ecommerce services at Wanda's nationwide chain of 107 shopping malls and department stores.

These services will enable them to launch cross-marketing promotions, share user and membership systems, integrate data, and introduce online payment services.

In a separate statement, Tencent said the alliance would help promote its online payment channels, Tenpay and Weixin Payment, which will be the joint venture's preferred payment channels, the Financial Times reported. 

Another advantage for the partnership will be access to the 438m monthly active users of WeChat, the mobile messaging service developed by Tencent.

By teaming up with Tencent and Baidu, Wanda will be able to benefit from online-to-offline ecommerce, confirmed Dong Ce, the chief executive of the new venture, in comments to Xinhua.

"The online-offline integration is an inevitable trend for future business terminals and ecommerce companies," he said.

Data sourced from New York Times, Financial Times, Xinhua; additional content by Warc staff