The companies belonging to three of China’s richest men are joining forces to form a new RMB 5 billion ($814 million) online shopping platform as Dalian Wanda, Tencent and Baidu are reported to be ready to sign a deal as early as this week.
According to a report in the Wall Street Journal, the agreement between Wang Jianlin’s Wanda, which owns more than 85 shopping centres and 51 5-star hotels in China, and the two high tech giants, aims to help consumers buy goods and services from Wanda’s many establishments through mobile apps.
The joint venture also hopes to make it easier for consumers to use Baidu and Tencent’s maps and search to interact with (and buy from) Wanda’s many establishments.
Fulfilling Wanda’s Online Ambitions
The agreement between the three companies appears to fulfill a plan that Wang Jianlin announced in July, when the real estate tycoon said that it planned to raise RMB 5 billion for a new ecommerce business.
Speaking at a working conference at the time, Wang foreshadowed the joint venture with Tencent and Baidu by saying, “We will invite the largest -Chinese e-commerce operators to invest in our e-commerce business… the initial investment will reach 5 billion yuan,” according to a report in the Global Times.
Wang’s decision comes as many retailers are seeking to find online approaches to drive more traffic to their bricks-and-mortar stores, and as many mall operators, particularly in Wanda’s mid-to-low tier bracket, are reporting fewer customers due at least in part to competition from ecommerce.
Uniting China’s Big Three Billionaires
The cooperative venture between Wanda, Baidu and Tencent brings together what are said to be China’s three richest billionaires. According to Forbes, Wanda’s Wang Jianlin ranks first in China with a personal fortune of $15.9 billion, while Tencent founder Pony Ma is second with a worth also estimated at $15.9 billion, and Baidu’s Robin Li ranks third with assets of $15.7 billion.
This new online to offline venture may also be a way for all three companies to attempt to grab a piece of the online shopping business that has helped to make the upcoming public stock listing of Jack Ma’s Alibaba Group one of the biggest IPO stories of the last few years. Alibaba’s Taobao and T-Mall dominate ecommerce in China, while Baidu, which excels in search, and Tencent which has its background in messaging and games, have struggled to gain a piece of the lucrative online shopping pie.