Tencent boss Pony Ma is spending more of his WeChat cash to gain a retail foothold
Tencent and Hillhouse Capital have signed a RMB 1 billion ($145.6 million) strategic investment agreement with Japanese-style retailer Miniso, according to an announcement by the Guangzhou-based company on Monday.
“The investment of Tencent and Hillhouse Capital will help the future development of Miniso by improving its ability in terms of information technology, capital operation, and corporate governance,” according to a press release from the budget chain store operator.
The online-to-offline retail (O2O) deal, which follows just two weeks after Miniso reached a strategic cooperation agreement with Tencent rival JD.com, marks yet another move by a mainland Internet giant to expand its physical retail footprint in China and across the region.
Committing to Smart Retail
Miniso sees the investment as helping it in the field of intelligent retail and accelerating its overseas market expansion. The retailer will corporate with Tencent and Hillhouse in the fields of big data analysis, smart outlets, intelligent retail, and digital operations.
Meanwhile, the capital introduced will also help it expand to 100 countries, from more than 70 at present. Worldwide, the company has built a network of 3,000 stores.
Tencent and Hillhouse Capital’s investment is Miniso’s first external financing since it was established in 2011 by Japanese designer Jun’ya Miyake and Chinese entrepreneur Ye Guofu.
Lei Zhang’s Beijing-based venture firm Hillhouse was an early investor in China’s both Tencent and JD.com.
Miniso’s earlier agreement with JD.com allows the retailer to sell some of its products on JD’s home delivery service platform, and is aimed at helping it to expand online sales. At the time that deal was signed MINISO said that its online sales increased by 540 percent leading up to the final agreement in September.
Miniso Targets 10,000 Stores by 2022
MINISO is a Chinese low-cost household and consumer goods seller
Miniso mainly sells household and consumer goods including cosmetics, stationery, toys, and kitchenware at prices ranging from $1.50 up to $30. Its business model calls for low prices for appealing goods while while relying on technology and efficient management to build profitability.
Last year Miniso reported revenues of $1.8 billion, up 20 percent from $1.5 billion in 2016 and a 140 percent increase from the figure for 2015. It targets RMB 100 billion ($14.6 billion) in revenue by 2022. In the first half of this year sales outside of China amounted to $380 million.
The company aims to operate more than 10,000 stores worldwide by 2022, up from 3,000 across Asia, Europe, Australia, Africa, and America. It has added 1,200 stores since the beginning of 2017.
The company aims to have a total of more than 10,000 stores across Asia, Europe, Australia, Africa, and America by 2022.
Tencent Chats Up More Retailers
During this year, WeChat-owner Tencent has signed a number of agreements aimed at leveraging its one billion app users to expand into China’s offline retail market.
In January it was reported that Tencent acquired a stake in Carrefour, with the duo jointly opening the first Le Marche store in Shanghai in May this year. The new store in Shanghai’s Changning district is a smart shopping mall which employs facial recognition technology for payments.
Shortly after that mall was launched, Tencent formed a joint venture with China’s largest owner and operator of shopping centres – Dalian Wanda Group – to form a smart shopping mall-focused joint venture.
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