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China's Dalian Wanda Group teaming up to create huge e-commerce platform
[August 29, 2014]

China's Dalian Wanda Group teaming up to create huge e-commerce platform


(Guardian Web Via Acquire Media NewsEdge) The Chinese property firm Dalian Wanda Group has announced plans to join two of the country's biggest internet companies, the search engine Baidu and social media giant Tencent, in building a massive e-commerce platform.



The venture could challenge the dominance of China's largest e-commerce platform Alibaba, which will soon debut on the New York Stock Exchange in what analysts expect to be one of the biggest initial public offerings in history.

Wanda CEO Wang Jianlin, Baidu CEO Robin Li, and Tencent CEO Ma Huateng announced the venture at a signing ceremony on Friday morning in the southern city of Shenzhen. Wanda will own 70% of the venture, while Baidu and Tencent will own 15% each.


The still-unnamed venture, which will start with an initial investment of 5 billion yuan (£490m), will pit China's wealthiest men head-to-head. Alibaba's chairman, Jack Ma — a former English teacher from the eastern city Hangzhou — is China's richest person, worth an estimated $21.8bn, according to Bloomberg. Tencent's Ma is the country's second richest, Li third, and Wang fourth.

"Within five years the total investment will be around 20 billion yuan," Wang said, according to Reuters. "We will bring in new investors to increase the cash flow." The project "is all about integrating online with offline", Baidu spokesperson Kaiser Kuo said in a phone interview. "All along we've connected users with information — with content, with maps — and the next logical step is to connect them directly with services." He continued: "This is not about ordering stuff that will come to me in the mail." Rather, the platform will give Chinese mobile internet users the option of searching for a nearby product or service — "say a massage, or a movie, or a workout" — finding a place that offers it, and making the purchase, through one integrated process.

"For Wanda you can see the logic — this whole online-to-offline trend is something that any self-respecting retailer has to embrace," said Duncan Clark, chairman of the Beijing-based consultancy BDA China. "There is this fear, as we've seen with Best Buy and others, that the retail store is becoming a place where people look at stuff and then they order it with their mobile phones. So you don't want to just be a loss-making shopping venue." Tencent, the Shenzhen-based company behind WeChat, China's most popular app, with 438 million monthly active users, called the venture a way to expand its online payment platforms TenPay and Weixin Payment. Baidu will lend its search and map functions to the project. Both companies have unsuccessfully attempted to form e-commerce companies in the past.

Wanda is one of China's biggest property conglomerates, with at least 49 major commercial properties and 50 department stores across the country, as well as a number of hotels and resorts. Last year, it unveiled plans to build a 50 billion yuan film studio in the coastal city of Qingdao called the Oriental Movie Metropolis. Leonardo DiCaprio, Nicole Kidman and Harvey Weinstein attended a ceremony marking the announcement.

Wanda has also begun a major push to expand its international footprint: in 2012, it acquired the US cinema chain AMC Cinemas for $2.6bn and last year, it bought the British yacht maker Sunseeker. The company plans to build major luxury hotels in London and Chicago.

Alibaba is also hoping to bridge online and offline ventures — in March, the company announced that it would invest $692m to partner with the Hong Kong-listed Intime Retail Group, which operates 36 high-end department stores in China.

China's e-commerce market will likely grow to $450bn by the end of the year, a rise of 45.8% over 2013, according to the Beijing-based firm iResearch. PriceWaterhouseCoopers found that one in seven Chinese people shop online at least once daily.

(c) 2014 Guardian Newspapers Limited.

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