Tencent may invest in Carrefour China as internet giants extend retail war

Tencent may invest in Carrefour’s China unit with Yonghui as the French retailer attempts to stem a decline in sales.

PUBLISHED : Tuesday, 23 January, 2018, 7:15pm
UPDATED : Tuesday, 23 January, 2018, 11:35pm

Tencent Holdings, China’s biggest internet company, may jointly invest in French retail giant Carrefour’s struggling Chinese operations with supermarket operator Yonghui Superstores, as part of a broader strategic partnership to boost the bricks-and-mortar business through the use of data analysis and mobile payments.

“The potential investment will leverage Carrefour’s global retail knowledge with Tencent’s technological excellence and Yonghui’s operational know-how and in particular its deep knowledge of fresh products.” Boulogne-Billancourt, France-based retailer Carrefour said in a release, without saying how much the investment will be.

Carrefour has also agreed to explore a partnership with Tencent in which the Shenzhen-based company will lend its digital expertise, according to the statement. Carrefour will remain the largest shareholder of the China unit, it said.

Tencent said it looked forward to “cooperating with Carrefour in further enriching retail and services experience” for its users and enhancing Carrefour’s services with Tencent’s technological capabilities such as mobile payment, digital membership programs, customer acquisition and cloud services.

China’s internet giants have been trying to find new growth engines for their business by either partnering up with established offline retailers or rolling out their own bricks-and-mortar chains, including unstaffed stores. Tencent’s foray into retail follows an expansion by Alibaba Group and into physical shopping in what is dubbed “New Retail”, in which online functions such as payments, delivery and logistics management are integrated with shopping at the high street store.

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“What Carrefour also wants from the partnership might be the online resources e-commerce giant has, as Tencent is the biggest shareholder of” said Luo Xianfei, retail analysts with Northeast Securities. “Now most of China’s retail giants, either foreign or domestic, have all chosen sides with either Alibaba or Tencent … Now we can wait and see which one could win in this fierce war of retailing in China.”

For Carrefour, the investment and partnership is the latest step in its attempts to stem a decline in sales in China, where it operates hypermarkets and convenience stores. Sales declined 5.4 per cent in the fourth quarter amid increasing competition from local chains.

For Tencent, the tie-up is another way to make its WeChat application more essential to the daily lives of its 980 million global users by integrating shopping to its platform.

Besides shopping, WeChat is both a messaging and social media platform as well as mobile payments tool, and it recently became a virtual host for China’s digital national identification card and social security details.

Tencent bought a minority stake in Yonghui last year, while Alibaba invested $2.9 billion in Sun Art, China’s top hypermarket operator. Alibaba owns the South China Morning Post.

With additional reporting by Amanda Lee in Beijing.