Tencent Teams Up With Carrefour China to Expand O2O Offering

Chinese tech giant Tencent is eyeing an investment in Carrefour China alongside Shanghai-listed supermarket chain Yonghui Superstores, said French retailer Carrefour in a press release.

Under the terms of the non-binding agreement, the company that rules China’s social media world via WeChat will join the mainland supermarket operator to take an unspecified stake in Carrefour’s China unit. Boulogne-based Carrefour will remain the largest shareholder in its China unit after completion of the prospective investment.

Carrefour Goes Big on Data

The French hypermarket chain also signed a preliminary agreement regarding a strategic business cooperation in China with Tencent. The pair would cooperate on data, smart retail, mobile payment, in-store experience and data analysis to boost Carrefour China’s customer traffic.

The move could help Carrefour strengthen its e-commerce business and curb its reliance on physical stores as the retail behemoth faces mounting competition from Amazon and Alibaba’s Taobao division. Carrefour said that the investment would combine its global retail knowledge with Tencent’s technological excellence and Yonghui’s operational knowhow, and would “improve its online visibility, increase the traffic of its offline and online retail activities.”

The company operates over 12,000 stores worldwide including 225 hypermarkets and 30 convenience stores in mainland China. Analysts have said that Carrefour continues to lose money in China, where it faces sharp competition from domestic retailers and a surging e-commerce market.

Through the proposed deal, Tencent would further develop the retail services offered on its social platforms and promote the use of its social media app WeChat, the WeChat payment platform, and cloud computing within the Carrefour ecosystem.

Tencent Expands O2O Efforts

The Shenzhen-based tech firm is ramping up its investment in China’s retail sector, announcing last month it would buy a five percent stake in Yonghui Superstores. Less than a week later, Tencent paid $604 million for a seven percent stake in Chinese online shopping platform Vipshop Holdings, as part of an $863 million joint investment alongside e-commerce titan JD.com.

The deals followed a similar offline retail play by Alibaba, the country’s leading e-commerce operator. In November, the NASDAQ-listed firm acquired a $2.9 billion stake in China’s top grocery operator Sun Art Retail Group, becoming the second-largest shareholder in the company. Through the deal, France-based food retailer Auchan Retail SA also increased its stake in Sun Art.