HONG KONG Feb 20 China's largest Internet
company Tencent Holdings Ltd and online retailer
JD.com are in talks to combine their e-commerce business, a
person familiar with the matter told Reuters on Thursday,
confirming earlier media reports.
Any deal between two of China's largest online companies
would help narrow the huge gap between e-retailers and Alibaba
Group Holding Ltd, which dominates China's booming online
The prospects for a binding agreement, however, remained
unclear, the person familiar with the matter said.
Alibaba's Tmall marketplace controls at least half of all
online retail sales and its e-Bay like Taobao also controls
around 80 percent of consumer-to-consumer online sales,
according to data from Euromonitor.
By comparison JD.com, China's second-largest e-commerce
company, has a nearly 13 percent market share.
Tencent and JD.com are considering several options,
including Tencent getting a 6 percent stake in JD.com in
exchange for merging its less-popular online shopping operations
with JD.com's more established platform, Bloomberg said in an
The 21st Century Business Herald newspaper had also reported
that Tencent may buy a stake in JD.com, citing an unidentified
investment banking source.
Tencent declined to comment when contacted by Reuters. A
spokesperson for JD.com told Reuters it was not company policy
to comment on market rumors. The person who spoke to Reuters
declined to be identified as the discussions are confidential.
JD.com has filed for a U.S. initial public offering, seeking
to raise $1.5 billion. The company said in December it would top
its 100 billion yuan ($16.5 billion) annual sales target in
Alibaba is also widely expected to launch an IPO,
underscoring the rising investor enthusiasm surrounding China's
booming online retail market..
China's business-to-consumer e-commerce sales may surpass
$180 billion this year due to rising internet penetration,
expanding middle-class incomes and a better distribution
network, according to New York-based market research firm
Tencent, Alibaba and search engine giant Baidu Inc
are also competing to cash in on the rising popularity of mobile
internet in China.
Tencent gets the majority of its revenue from computer
games, but its mobile games are also hugely popular, according
to figures from domestic app stores. Tencent's WeChat social
messaging app is also used by more than half of all Chinese
Tencent shares were down 3.1 percent, while the benchmark
Hang Seng index was down 1.2 percent.