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Tencent and Baidu Team Up with Wanda Group to Set E-Commerce Joint Venture

Date:29-08-2014

Tencent Holdings Ltd and Dalian Wanda Group in China said that they would set up an e-commerce joint venture of $814 million (5 billion yuan) with Baidu Inc, as the firms push into the high-growth e-commerce sector.

The joint venture is to be registered in Hong Kong, and will be 70 percent owned by Wanda. While the Chinese internet giants Baidu and Tencent will hold 15 percent stake respectively, China is the biggest e-commerce market in the world with Alibaba Group Holding Ltd being China’s No.1 player and transacting more goods than combined sales of eBay Inc and Amazon.com.

Chief executive of the new venture, Dong Ce said that by teaming up with Baidu and Tencent, Wanda will become the biggest online-to-offline e-commerce platform in the world. O2O or Online-to-offline involves people using their smartphones to find and purchase goods and services, most often those that are physically close to them.

Chairman of Wanda, Wang Jianlin, who is also China's wealthiest man, said that O2O is the biggest pie in e-commerce. The tie-up will also compete with Alibaba for a slice of that growing pie.

This partnership will promote Weixin Payment and TenPay, Tencent’s online payment platforms which is a competitor to Alipay, Alibaba’s online payment platforms. Weixin and TenPay Payment will now be the preferred payment method for transactions across all of Wanda’s businesses. The e-commerce company will also benefit from having access to online dramas, movie and TV which is owned by Wanda.

Tencent said that the deal is structured over three years. The initial investment by the three firms will amount to 1 billion yuan.

Wang said that within five years the total investment will be around 20 billion yuan. They will also bring in new investors to increase the cash flow.

In 2012, Wanda acquired AMC Entertainment Holdings Inc, U.S. cinema operator. Wanda is a luxury hotel, film conglomerate and commercial property.

Tencent, Video games giant and social media giant and Baidu, China's dominant search engine will help the tie-up build payment products and internet finance, customer account and big data services, and membership systems.

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