January 27, 2010 / 9:56 AM / 10 years ago

UPDATE 1-Rakuten to set up online mall JV with China's Baidu

* To start online mall in China this year

* Rakuten to take 51 pct stake, Baidu 49 pct (Adds details and background)

By Taiga Uranaka

TOKYO, Jan 27 (Reuters) - Japanese online mall operator Rakuten 4755.Q said on Wednesday it has agreed to set up a joint venture with China’s top search engine Baidu (BIDU.O) to launch a virtual shopping mall targeting the world’s largest online population.

Rakuten, which has been trying to expand its operations overseas, said the joint venture would aim for the No. 1 spot among China’s online shopping malls.

Baidu already has its own e-commerce platform called Youa, which competes with China’s largest online retailer Taobao.

Rakuten said it would take a 51 percent stake in the venture, with Baidu to hold the rest. Total investment in the venture would be about 4.3 billion yen ($48.2 million) over three years, it said in a statement.

The Japanese company said the joint venture plans to start the service sometime late this year, pending approval from local authorities. The name of the service has not been decided.

Rakuten’s online mall in Japan has slightly more than 30,000 stores and a membership of 60 million.

Japanese bricks-and-mortar retailers like Seven & I Holdings (3382.T), Aeon Co Ltd (8267.T) and Uniqlo (9983.T) are aggressively opening stores in China, which is on track to overtake Japan as the world’s second-largest economy.

In the online world too, China’s volume growth has attracted overseas players. The number of Internet users in China jumped by nearly a third in 2009 to 384 million, more than the entire population of the United States but still only about 30 percent of China’s 1.3 billion people. [ID:nTOE60E06S]

China’s total e-commerce industry was worth 250 billion yuan ($36.6 billion) last year, according to research firm Analysys International.

Baidu rival Taobao is a unit of Alibaba Group, which is 40 percent-owned by Yahoo YHOO.O. Alibaba Group chief executive Jack Ma said last week Taobao aims to double the value of the transactions it handles to 400 billion yuan this year. [ID:nTOE60I06I] (Additional reporting by Melanie Lee in Shanghai)

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