China’s richest man may have just gotten a bit poorer after Internet giants Tencent and Baidu apparently walked away from a $3 billion ecommerce joint venture with Wang Jianlin’s Dalian Wanda group.
Just two years ago, Wang was trumpeting the creation of the ffan.com online-to-offline (O2O) shopping platform with Tencent, which makes China’s all-encompassing WeChat app, and China’s largest search provider Baidu as the birth of a new business line in ecommerce for China’s largest commercial property developer.
However, as revealed in a regulatory filing last month, the two tech powerhouses quietly exited the attempt to link Wanda’s portfolio of more than 100 malls to China’s growing legion of online shoppers. The company is now 100 percent controlled by Wanda affiliates.
The setback is the latest in a series of recent struggles for Wanda, as Wang attempts to transform his real estate firm into a $200 billion conglomerate operating across business areas as diverse as theme parks, online finance and sports marketing.
Wanda, Tencent and Baidu Find Out Ecommerce Isn’t Easy
Wang joined with Tencent chief Pony Ma and Baidu’s Robin Li in August 2014 to announce the formation of what would eventually become ffan.com, an online venture that aimed to allow consumers to leverage Tencent and Baidu technology to shop for items in Wanda’s malls, as O2O became the buzzword that would transform China’s shopping centres into smart malls.
The three companies invested RMB 5 billion (then $814 million) to create a web platform, with the stated goal of creating a $3 billion ecommerce giant. The combination of a fleet of offline centres with Baidu’s maps and WeChat’s social network was aimed at finally challenging Alibaba’s dominance of China’s online shopping field.
However, it took the three heavyweights around eight months to have a website online for testing purposes, and even then the platform had only limited merchandise available, with most listings on the site promoting restaurants at Wang’s Wanda Plaza shopping centres.
Even now the platform, which once promised that for consumers who “see a lady wearing a good-looking dress, all you have to do is take a picture of that dress and we can show you which store in which Wanda mall is selling it,” offers only limited merchandise on its website and a minimalist mobile app.
Wang himself, who had no ecommerce or Internet expertise before launching ffan.com, may have misunderstood the desires of China’s convenience-hungry shoppers. Going against the grain of most online shopping sites, ffan.com opted not to include delivery of merchandise, with Wang explaining that, “Consumers like to shop in the bricks-and-mortar stores. The total visits of our shopping malls increased 33 percent to 163 million in 2014.”
Ecommerce Fail Follows Spanish Stumble and Legendary Delay
For Wanda, the fading of ffan.com comes soon after the company has encountered setbacks with a project in Spain, problems with a $1 billion London development, and losses at its recently acquired Legendary Studios acquisition.
Just one year ago, Wang had predicted that, in addition to adding 900 new malls to the company’s 100 centre portfolio, by 2020 Wanda would reach a $200 billion market capitalisation by sprouting new divisions specialising in ecommerce and finance. These new business lines were expected to complement Wanda’s existing diversification into theatres and movie production.
Just last month, however, Wanda sold off a Madrid project after failing to win approval to tear down and rebuild a historic structure as part of its development plan.
In London, Wanda was more fortunate, as a $660 million loan from Ping An Bank should help the developer to complete its One Nine Elms project in the city, after its original contractor walked away from the development in the midst of a housing glut in the area.
Much of Wanda’s expansion in recent years has been into culture and entertainment, where it has also faced difficulties of late. Wang announced this week that Wanda would be delaying the integration of Legendary Entertainment into its Wanda Cinema Line division, as the privately-held movie production house had still not recorded a profit. Yesterday, the company said that the Wuhan theme park it opened in 2014 had closed for renovation.