Tencent, JD.com Buy Stake in Retail Chain
Chinese tech giants Tencent Holdings and JD.com have agreed to buy a combined 11% stake in a domestic supermarket and department chain store operator in their latest bid to expand into the physical retail market.
Tencent, which operates China’s most popular social media platform, WeChat, is buying a 6% stake in Shenzhen-listed Better Life Commercial Chain Share Co. for 887 million yuan ($140 million), Better Life said in a filing on Friday.
Meanwhile, JD.com, China’s second-largest e-commerce company, will acquire a 5% stake in Better Life for 739 million yuan, according to the same filing.
The three companies signed the transaction agreements on Feb. 14.
The price of the deals represents a 10% discount of Better Life’s share price at the closing of Jan. 19 before its trading was suspended. Better Life’s shares will resume trading on Monday, the company said.
Hunan-based Better Life, also known as Bubugao, operates 304 chain stores and supermarkets in China, primarily in medium and small cities. In the first three quarters last year, Better Life reported 9.9% annual growth in sales revenue to 12.7 billion yuan.
After years of fierce competition in the online retail arena, Chinese tech giants are stepping up efforts to expand their traditional retail market presence to reach new customers, collect consumer data, and link the online and offline world.
In addition to Better Life, Tencent in recent months has announced about 20 billion yuan worth of investments in an array of traditional store operators including clothing retailer Heilan Home Co., supermarket chain Yonghui Superstores and French operator Carrefour.
Similarly, JD.com earlier this month entered a strategic partnership with Hong Kong-based Fung Retailing, which runs thousands of stores globally, including the Asia outlets of Toys R Us.
Last month, JD.com debuted its first offline fresh food supermarket in Beijing. This follows suit of its archrival Alibaba Group, which has been operating a brick-and-mortar fresh food supermarket chain, Hema, since 2016.
Alibaba on Feb. 11 said it will buy 15% of one of China’s leading traditional home improvement chains, Beijing Easyhome Furnishing Chain Store Group Co., extending its strategy of combining online and offline retailing.
Contact reporter Han Wei (firstname.lastname@example.org)
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