While Alibaba Group Holding basked in the glow of its record initial public offering, internet rival Tencent Holdings deepened its online-to-offline (O2O) retail service capabilities on the mainland with additional investments in
58.com and China South City Holdings.
Tencent, now Asia's second-largest internet company behind Alibaba, was estimated to have spent HK$1.6 billion last month to boost its ownership in the two enterprises.
Both Tencent and Alibaba are locked in a race to develop the mainland's O2O market. That effort is widely expected to help further expand the retail industry through closer ties between e-commerce and traditional bricks-and-mortar retailers and service providers.
According to its filing with the US Securities and Exchange Commission, Tencent now owns 24.09 per cent of New York-traded
58.com which runs the mainland's biggest, Craigslist-like online classifieds site.
Barclays Research estimated Tencent spent close to US$100 million buying 2.74 million shares in
58.com after paying US$736 million in June for a 19.9 per cent stake.
Alicia Yap, the head of China internet research at Barclays, said the increased stake would allow Tencent "to better integrate resources with
58.com and participate more directly in its strategic direction and growth strategy".
58.com said in August research and development spending was being raised to develop new product categories for Tencent's wireless platforms Mobile QQ and WeChat. Integration is expected to be completed by the end of this year.
Both business-to-business and consumer-to-consumer transactions are supported by
58.com Its listings content - covering categories such as housing, jobs, cars, pets and tickets for shows - is highly compatible with Tencent's mobile platforms.
Tencent also spent HK$822.5 million to buy 244.8 million shares to increase its interest to 11.55 per cent in China South City, one of the mainland's leading developers of logistics and trade centres.
In January, Tencent paid HK$1.5 billion for a 9.9 per cent stake in China South City, which launched in August an O2O platform called Huasheng Outlets-Weixin Mall. Retailers on the system get real-time tracking and analyses of customer preferences.
Alibaba aggressively built its O2O infrastructure before its listing last month. It forged a pact with China Post in June to jointly develop a "smart" logistics network. That followed a US$692 million investment in Intime Retail, one of the mainland's largest department store chains.
This article appeared in the South China Morning Post print edition as: Tencent deepens push into offline retail services
