Chinese internet giants Tencent and Baidu team up to take on Alibaba’s e-commerce dominance

The e-commerce war in China is heating up to a level never seen before — two Chinese internet giants, Tencent and Baidu, are teaming up in e-commerce to take on the country’s top e-commerce firm: Alibaba.

Tencent, Baidu and Chinese conglomerate Wanda have jointly announced that they are investing CNY5 billion ($814 million) over the next three years to set up an e-commerce company. The first year will see a total of CNY1 billion ($163 million) being sunk in. Wanda, which has businesses in real estate, tourism and entertainment, will hold a 70 percent stake in the joint venture, while Tencent and Baidu will have 15 percent each.

The e-commerce company will focus on online-to-offline (O2O) services. Tencent told TNW in a statement that the initiative underscores the company’s “commitment to enriching our O2O ecosystem and delivering superior experience to our users through connecting them with goods, services and businesses.”

Online-to-offline services are becoming increasingly popular in China — in an interview earlier this year, Poshu Yeung, vice president of the international business group at Tencent, revealed that WeChat wants to be a gateway to other companies and services. This is essentially the online-to-offline concept, which typically sees people making use of their mobile devices to connect to purchases near them.

The three partners in the new e-commerce company will work together on other initiatives such as the sharing of traffic, media and advertising resources, as well as membership benefits, payment technology and big data (which is where Baidu will play a key role).

Tencent also says that it will benefit from popularizing its online payment solutions — TenPay and Weixin Payment (available within popular messaging app WeChat) will be the preferred payment platform for all payments made on the e-commerce joint venture. The partnership will also help boost content on Tencent’s video platforms by tapping into the intellectual property Wanda owns for movies, TV and online drama series.

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