Published Date : Dec 18, 2017
Formally named as 360buy and commonly referred as Jingdong or JD.com, the Chinese ecommerce company has collaborated with Tencent Holdings Limited to raise an investment of US$863 mn in Chinese online retailer Vipshop Holdings Limited. This alliance now reflects the most prominent joint venture between a major social media company with two leading names in ecommerce.
Under the new deal, JD and Tencent will earn one share at US$65.40, which is equivalent to premium of 55 percent over the Friday close of Vipshop. Once the deal is done, JD and Tencept will gain a stake of about 5.5 percent and 7 percent respectively in Vipshop.
Those close to the collaboration reveal that the alliance will help JD’s might in electronic products to collaborate with Vipshop’s proven proficiency in fashion. On the other hand, Tencent will bring in its strong online penetration via its highly popular WeChat app. Tencent already has significant stakes in the messaging App and this deal is further foray by the company to expand its online portfolio as well as logistic networks. The target of the company is to stand to the stiff competition coming from Chinese ecommerce leader Alibaba Group Holding Ltd.
According to Richard Liu, the Chairman of JD.com, the sheer strength of Vipshop to quickly sell products with a robust management team has been behind this strategic collaboration. The partnership is expected to further strengthen the position among female shoppers and help in the expansion of the breadth.