Tencent buys stake in Chinese supermarket chain, waging war with Alibaba in new retail
The tech giant buys a 5pc interest in Shanghai-listed Yonghui Superstores
Tencent Holdings has agreed to purchase a stake in one of China’s largest supermarket chains, Yonghui Superstores, in the latest move to step up the war with Alibaba Group Holding in the “new retail” battleground of online-offline shopping.
Shanghai-listed Yonghui announced on Monday evening that Tencent would buy a 5 per cent stake at an unspecified price. At the same time, Tencent would increase its investment in Yonghui Yunchuang Technology, which will give the technology giant a 15 per cent interest in the Yonghui subsidiary.
Yonghui shares jumped to its daily limit on Friday, following a report by Caijing magazine of Tencent’s agreement to invest heavily in Super Species, the fresh grocery store brand of Yonghui. Yonghui’s shares have been suspended since Monday.
Super Species was launched on January 1 this year by Yonghui Yunchuang.
According to an earlier Yonghui announcement, the supermarket operator employs a hybrid operation model of “high-end supermarket + fresh food restaurant + O2O (online to offline)”. Super Species has entered six mainland Chinese cities so far with 17 physical stores.
The investment has put Tencent in direct confrontation with Alibaba, which has aggressively bet on the integration of online to offline commerce, or new retail, and announced to open 20 more of its physical fresh grocery store, Hema Supermarkets.
Through seamless integration of online and offline shopping, internet giants are seeking to blur the line between the two to mine big data gleaned from consumers’ browsing and buying habits for insights of shopping patterns that will help them sell more.
Tencent’s acquisition will put it on par with Chinese online retailer JD.com, which is already an investor in Yonghui.
Alibaba, which owns the South China Morning Post, has made a spate of investments in bricks-and-mortar stores in the past few years.
In late November, it agreed to pay US$2.9 billion for a 36.16 per cent stake in Hong Kong-listed Sun Art Retail Group, which runs one of the biggest hypermarket chains in China. In June, it bought an 18 per cent stake of Lianhua Supermarket. Two years ago, it took a minority shareholding in Chinese consumer electronics retailer Suning Commerce Group and invested in department store chain Intime Retail Group in 2014.