Wanda teams up with Tencent, Gaopeng for internet joint venture

Real estate conglomerate Dalian Wanda Group announced on Wednesday that it plans to team up with internet giant Tencent Holdings Ltd and investment platform Gaopeng to form a new internet joint venture to power smart retailing and digitalized consumer experiences.

The new joint venture will incorporate the three companies' strengths and integrate both online and offline businesses by transforming Wanda's offline presence into smart shopping malls and driving online traffic through Tencent's social platforms including WeChat.

"The cooperation will bring in enormous online traffic through WeChat and other platforms, enabling Wanda Plazas to undergo smart upgrades, build a robust membership system and increase overall value," Wanda said in an announcement.

Wanda Commercial Management Group will hold 51 percent of shares in the new joint venture, while Tencent and Gaopeng, a joint venture of US group-buying website Groupon and Tencent, will hold 42.48 percent and 6.52 percent, respectively.

Qi Jie, president of Wanda Commercial Management Group, will serve as chairman of the new joint venture while Gao Xia, CEO of Gaopeng, will act as CEO.

Li Junhui, an internet analyst and a senior research fellow at the China University of Political Science and Law, said that the move has established a new model and ecosystem for the consumption industry, where the three parties are exploring opportunities to drive future growth in the country's burgeoning consumer market.

"The move will be a comprehensive digital upgrade of Wanda's offline scenarios. It provides the company with another way of linking consumers with commercial centers and stores in addition to its real estate properties," Li said.

Wanda Commercial Management Group, as the world's largest brick and mortar commercial entity, had 235 Wanda Plazas with a total retailing space of 31.51 million square meters and annual customer traffic of 3.19 billion visits at the end of 2017.

"On the other hand, it will speed up Tencent's smart retailing strategy as it will offer Tencent access to huge volumes of offline traffic and varied consumption scenarios," he added.

In the past few years, both Tencent and rival Alibaba Group Holding Ltd are betting on various technologies to transform traditional grocery and department stores, hoping to boost orders and amass purchasing data.

Tencent's investment earlier this year in Chinese menswear group Heilan Home Co Ltd, its third move into the retail market within a week, highlighted its ambition to challenge Alibaba in the retail sector.