Chinese internet giant Tencent Holdings Ltd said on Monday the item would certainly lead an $863 million investment in apparel platform Vipshop Holdings Ltd , upping its rivalry in retail with Alibaba Group Holding Ltd.
Tencent will invest $604 million in exchange for a 7 percent stake in Vipshop, while e-commerce firm JD.com Inc – a long-standing ally – will invest $259 million for a 5.5 percent stake, the two firms said in a statement.
The companies did not clarify why the cost of Tencent’s purchased stock was higher than JD.com’s. Neither company responded to requests for comment on Monday afternoon.
The deal extends a recent push by Tencent into Alibaba’s home turf of retail, where the firm hopes to leverage its messaging service WeChat along with its online payment systems to drive shopping demand.
Martin Lau, Tencent’s President, said the tie-up would certainly bring Vipshop Tencent’s “audiences, marketing solutions, along with payment support” to help tap China’s rising middle class. Tencent’s WeChat has nearly a billion users.
The looming retail battle reflects a wider, long-running stand-off between Tencent along with Alibaba, who have made competing investments in areas as diverse as bike-sharing apps, food delivery along with gaming.
“Right at This particular point from the Chinese market we have two internet powers,” said Weiwen Han, managing partner for Greater China at Bain & Company. “Investments will either fall into the Alibaba or Tencent camp.”
He added, however, which such deals were difficult to turn into successful ventures.
“the item remains to be seen how they will be integrated successfully, (along with) whether or not these will actually be effective investments.”
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