Tencent Invests $195M In Logistics Firm China South City To Compete With Alibaba

Chinese Internet giant Tencent is probably best-known in the rest of the world as the creator of WeChat and for its reported investment in Snapchat. On its home turf, however, Tencent is engaged in an aggressive battle with Alibaba, which dominates China’s lucrative and fast-growing online shopping industry. Now Tencent has strengthened its e-commerce strategy with an investment worth about $1.5 billion HKD (about $195 million USD) in China South City Holdings, a leading logistics firm.

Competition between Tencent and Alibaba, two of China’s most powerful Internet companies, has heated up recently as Alibaba prepares for its highly-anticipated IPO. Alibaba is also competing with international companies like Amazon, which plans to launch the Amazon Web Services suite of products in China soon.

Earlier this month, Alibaba announced the launch of Weibo Payment in partnership with Sina Weibo, the highly-influential microblogging platform sometimes called “China’s Twitter.” Alibaba said the new payment platform is meant to compete directly with WeChat’s payment services. In addition to Weibo Payment, Alibaba also announced plans to roll out a mobile gaming platform that will compete directly with products from Tencent.

China South City currently operates seven cross-industry trade and logistics centers throughout China, as well as e-commerce parks in Shenzhen and Nanchang. According to a press release, the partnership will allow the companies to “leverage their strategic resources for extensive collaboration in integrated online and offline trade services, including e-commerce, outlet services for branded goods, O2O retail business, online payment, and warehousing and logistics arrangements.”

Tencent’s investment in China South City Holdings isn’t the only news the company will announce this week. It is expected to debut its Mobile Open Platform strategy in a press conference tomorrow, which fits in with the company’s plan to promote its app distribution platform this year.

In a statement, Tencent president Martin Lau Chi Ping said:

“China South City is implementing a differentiated strategy of transforming existing local wholesale markets into modern
large-scale trade and logistics centers. We recognize its unique business model and the results it has achieved. Chinese small-to-medium sized enterprises have huge demand to expand their businesses online. Cooperation with China South City enables us to jointly facilitate such enterprises migrating online, utilizing China South City’s physical locations and logistics capabilities, together with Tencent’s Internet user platforms and technology capabilities.”