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JD.com extends access to Tencent’s WeChat for three years with US$220 million in stock

  • JD.com is keeping its preferential access to WeChat’s 1.29 billion users, extending a partnership with Tencent that gives it a short cut on the platform
  • The new stock issuance comes after Tencent offloaded US$16 billion in JD shares in December, reducing its stake to 2.3 per cent

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The Beijing headquarters of Chinese e-commerce company JD.com seen on June 2, 2020. Photo: Kyodo
Iris Deng
JD.com, China’s second largest e-commerce player, has extended its partnership with tech giant Tencent Holdings for three more years in a deal that will continue to give WeChat users easy access to the shopping platform, helping it maintain a unique advantage in driving online sales.

The renewed cooperation will preserve short-cut access to JD.com on Tencent’s dominant chat app, which has 1.29 billion monthly active users, as the companies continue to collaborate in marketing and advertising, technology services and other fields, the e-commerce firm said in an announcement on Wednesday.

Under the new deal, JD.com promised to issue shares worth US$220 million to Tencent over the three-year period.

“The two parties will leverage this mutually beneficial partnership to provide a better and more convenient shopping experience for users,” JD.com said in the announcement.

Tencent was previously the largest shareholder in JD.com until December, when the social media giant offloaded US$16 billion worth of shares in the e-commerce company to distribute as a special dividend among investors. Tencent’s stake in the company fell to 2.3 per cent from 17 per cent after the transfer.

Tencent first invested in JD.com in 2014, after retreating from its own e-commerce meant to compete with China’s No 1 player in the market, Alibaba Group Holding, owner of the South China Morning Post. At the time, Tencent acquired a 15 per cent stake in JD, which took over the operations of Tencent’s QQ Wangguo and PaiPai shopping platforms.

The companies’ ties grew closer as competition with Alibaba intensified, leading to JD.com enjoying prominent positioning on WeChat. Tencent’s multipurpose super app is an important gateway to many digital services in China, including shopping.

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