The e-commerce venture, which is scheduled to be announced later this week, will have Wanda owning 70 percent while Baidu and Tencent will each hold 15 percent. It will be a union of China's three most powerful non-state companies. Wanda sees the team-up with Baidu and Tencent as an opportunity to thrive in a country which is the biggest e-commerce market in the world. This is brought about by the rapid increase of smartphone users and how they generate new business opportunities through mobile shopping.
Wanda is a huge conglomerate company made up of commercial property, luxury hotel chains, and film. It is controlled by Wang Jianlin, the wealthiest billionaire of China whose net worth is revealed by Forbes to reach $16 billion.
In 2012, the company bought U.S. cinema operator AMC Entertainment Holdings. In September 2013, Wang brought famous Hollywood stars to China which include Zhang Ziyi, Leonardo DiCaprio, John Travolta, and Nicole Kidman. Part of his future plans include the opening of a huge movie-theme development that would be located in the coastal city of Qingdao. The venture is said to cost $8 billion.
The joint venture, which will be referred to as Wanda E-Commerce, will invest more than $800 million in the initial phase of the three companies' collaborative effort to penetrate the market of online-to-offline nature.
Wang believes that the online-to-offline business trend has the biggest opportunity in e-commerce. "There's no true online-to-offline platform in China, and in this situation, everyone's chances are equal," says Wang.
The three companies are aiming to leverage consumers at Wanda's nationwide chain of 100 department stores and shopping malls. They plan to achieve this through cross-marketing promotions and memberships that would target the millions of customers who utilize social networking, web-based search and the payment processing services of Baidu and Tencent.
Tencent is a Shenzhen-based company which is popular for video games and social networking apps. It is the biggest internet firm in China which has a market value of $156 billion. Baidu is often dubbed as the counterpart of Google.
The team up would make Wanda as the world's biggest online to offline (O2O) e-commerce service industry. This type of platform involves consumers who use their smartphones when searching and purchasing goods and services.
"O2O is the biggest pie in e-commerce... this is just the beginning," says Wang.
Apart from becoming the biggest name in O2O e-commerce, the joint venture is also meant to challenge Alibaba's position as the number one player in the world's biggest e-commerce market. Alibaba is said to transact more goods than eBay and Amazon combined.
