China’s ISP Giant Tencent To Invest In Vipshop
Tencent was founded in November 1998, leading Internet value-added providers in China that maintained a steady growth under the user-operating strategies since it was established. The Chinese Internet Giant Tencent went public on the main board of Hong Kong Stock Exchange on the 16th of October 2004, as the most valuable company in Asia with a capitalization in the market of $473 billion.
It now plans to invest over 4.2 billion yuan to get a 5% stake in the supermarket operator Yonghui Superstores Company Limited. It is already a major stakeholder in JD.com. On Monday, the Chinese giant, Tencent Holdings Limited said that they would lead an investment of $863 million in the apparel platform, Vipshop. Tencent Holdings and JD.com owns WeChat and will subscribe to the newly issued ordinary shares (Class A) of Vipshop.
The price of purchase will be $65.40 for every ordinary share (Class A).
This will have an equivalent $13.08 per American Depositary Share of Vipshop and a 55% premium over the ADS’ closing price on Dec. 15. Vipshop’s co-founder, chairman, and Chief Executive Officer, Eric Ya Shen, is delighted with the new strategic cooperation relationships with Tencent and JD.com. This is an important event for Vipshop as it is for the internet industries and e-commerce of China.
According to Shen, they will form a strategic alliance a win-win cooperation that would benefit the consumers and internet industries. They will also expand the said strategic alliance into broader areas.
Vipshop was founded in 2008 and has over 60 million active customers. It is also China’s largest online discount retailer when we talk about transaction value and works over 22, 00 brands. On the 30th of September, the New York Stock Exchange-listed Vipshop has net income of $50.8 million and $2.3 billion worth of net revenue.
This acquisition can compete against Mei.com owned by Alibaba. Mei.com is a similar flash sale site but smaller than Vipshop.
This will add a large number of female users to JD.com. The investment will help tap the young, female shoppers and give access to the consumers and data transaction to help compete against Alibaba’s Alipay. According to OC&C Strategy Consultants partner, Pascal Martin, the said investment makes ecosystem retail for the group and opens a lot of doors to provide different brands and channels from introducing new products.
According to Richard Liu, JD.com’s CEO, this would help in expanding the business in the field of fashion.
This investment will up the rivalry with Alibaba Group Holding Ltd. Tencent will also invest as much as $604 million for a 7% stake in Vipshop. Their long-standing ally and e-commerce firm, JD.com Inc go for a 5.5% stake in investing $259 million. Tencent’s purchased stick was significantly higher than JD.Com. When the media had asked about it, neither companies have yet to release their comments and official statements since Monday.
The said deal extends a push by Tencent into the home turf of Alibaba. The firm is hoping to have the leverage of the messaging service WeChat by its online system of payment by driving shopping demand. The tie-up would bring Vipshop Tencent’s payments support marketing solutions, and audiences to help in tapping the rising middle class of China according to Tencent’s President, Martin Lau.
Alibaba and Tencent have been competing in their investments from diverse areas as food delivery, bike-sharing, and even gaming. All these are the lists of the rivalry that reflects a long-running stand-off between the two companies.
According to Weiwen Han, the investments for the online retail shop and industry will drop in both companies, seeing as they are China’s two internet giants.
However, he added that such ventures are hard to succeed since it is still yet to be seen how they will be successfully integrated or whether they will turn into effective investments. Alibaba looks to reshape the battle lines of China’s market, both online and offline. The Tmall and Taobao platforms are dominating online and it invested $10 million in order to brick-and-mortar the stores.
More in Business
-
`
Streaming Giant Netflix Faces Yet Another Challenge
In the ever-evolving landscape of streaming entertainment, Netflix, once the unchallenged king of digital content, now faces a complex puzzle beyond...
December 1, 2023 -
`
Signs You Should Quit Your Current Job & Move On
You Don’t Feel Comfortable at Work Imagine spending the majority of your waking hours in a place where you feel uneasy,...
November 20, 2023 -
`
How to Adjust and Renew Your Portfolio
Investing in the financial world is like navigating an ever-changing landscape—constantly evolving, always shifting. The key to staying on track? Regularly...
November 18, 2023 -
`
Dr. Dre’s Divorce With Nicole Young: A Closer Look
When the beats of old-school hip-hop start bumping, Dr. Dre’s name reverberates in fans’ minds worldwide. Born as Andre Young, this...
November 12, 2023 -
`
Why Branded Content Is the Best Way to Connect With Your Audience
Have you ever found yourself deep in a compelling article or engrossed in a video series, only to later discover that...
November 5, 2023 -
`
Why the Gender Pay Gap Could Be Getting Worse | New Research Findings
At a time when women are making significant strides in various professional arenas, a new report throws light on a trend...
October 28, 2023 -
`
What Is a Bull Market and How Can Investors Benefit From One?
In finance, the term “bull market” is frequently used to describe a period of optimism, rising asset prices, and investor confidence....
October 19, 2023 -
`
A-List Power Couples Where the Women Make More Money
In an era of shifting gender roles and evolving definitions of success, it’s increasingly common to find celebrity couples where the...
October 15, 2023 -
`
Massive Price Cuts: Tesla Only Witnesses ‘Modest’ Sales Gain in China
Cutting Down Prices, But Not Cutting the Mustard? Summer 2023 brought with it a promise of sunshine and relaxation. For Tesla...
October 8, 2023
You must be logged in to post a comment Login