BEIJING Aug 26 Chinese oil giant Sinopec Corp
said on Tuesday it has signed a preliminary deal with
internet company Tencent Holdings Ltd to introduce
digital commerce to the retail arm the oil giant is partially
privatising in a sale analysts say could raise around $20
Sinopec said in a statement it has agreed to work with
Tencent, China's largest listed internet firm, in areas like
mobile payment, big data services and digital navigation at its
network of more than 30,000 petrol stations and over 23,000
convenience stores across China.
Sinopec is selling up to 30 percent of its retail arm. The
announcement of the Tencent partnership, the latest in a series
of similar deals in recent months, was aimed at promoting the
growth potential of Sinopec's non-fuel retail business ahead of
the planned sale, analysts say.
The oil company has signed agreements with multiple Chinese
firms this year to make more use of its petrol stations and
provide more services to consumers. The companies include
delivery service firm S.F. Express, retailer Ruentex Group,
e-commerce firm YHD.com and Taiping Insurance Group, Sinopec has
"The non-oil business of Sinopec...has huge potential.
Sinopec aims to provide comprehensive and integrated services in
the future," Sinopec Chairman Fu Chengyu said in the firm's
interim earnings call, according to Tuesday's statement.
Unlike in Western markets, where non-fuel businesses -
convenience stores and services like fast food or car washing -
can account for more than half of a fuel station's profits, more
than 99 percent of Sinopec's retail sales come from petrol.
Sinopec has shortlisted 37 bidding consortia for an up to 30
percent stake in its massive fuel retail unit and plans to
choose a winning bidder by end-September.
The firm said it will work with Tencent on customer loyalty
services, cross-marketing opportunities and online-to-offline
retail services. Online-to-offline involves people using their
smartphones to connect to the internet to order goods and
services for delivery from retailers.
It said it aims to make use of Tencent's hugely popular
messaging services, including the WeChat mobile app and QQ
Tencent, influential in video gaming and social media, is
pushing its e-commerce credentials in China, particularly for
WeChat. The app, known locally as Weixin, is turning into a tool
used for everything from chatting to gaming, booking taxis and
making payments with a smartphone.
This has put Tencent on a collision course with its
arch-rival, the soon-to-list Alibaba Group Holding Ltd
which dominates e-commerce in China. The two are
scrapping for dominance in the world's biggest smartphone
market, as the rise of the mobile internet opens up an array of
new business opportunities.
(1 US dollar = 6.1522 Chinese yuan)
(Reporting by Paul Carsten and Chen Aizhu; Additional reporting
by Charlie Zhu in HONG KONG; Editing by Kenneth Maxwell)