China-based Wanda E-commerce, which hopes to position itself as a rival against Alibaba, has raised one billion RMB (about $161 million) in funding from investment funds Shengke Limited and Hong Kong Xu De Ren Dao E-commerce Investment Co. Wanda E-commerce says this quadruples its valuation to 20 billion yuan (about $3 billion).
Wanda E-commerce was founded in August as a five billion RMB ($814 million) joint venture by mega-conglomerate Wanda and two of China’s biggest Internet firms, Tencent and Baidu . Wanda’s holdings in China include real estate, hotels, movie theaters, and shopping malls, but in the West the company is probably best known for acquiring AMC Theatres and Sunseeker International, a British yacht maker.
In a statement, Wanda E-commerce says it expects to be fully operational in the fourth quarter of this year, when it will also initiate a second round of fundraising. After the funding, Centec Networks now holds a three percent equity stake in Wanda E-commerce, while Xude Rendao holds two percent.
Tencent and Baidu each hold 15 percent of Wanda E-commerce. Their involvement in the venture is significant because they are Alibaba’s main rivals (in fact, the acronym BAT is used to refer to Baidu, Alibaba, and Tencent in China because they are the three biggest Internet companies there). Wanda E-commerce uses Tencent products like TenPay and Weixin Payment, which are both rivals to Alibaba’s online payment platform Alipay. The joint venture will also help Tencent as it seeks to capitalize on the e-commerce potential of WeChat, the most popular messaging app in China with 396 million users.
While Alibaba dominates China’s e-commerce industry, its rivals are still eager to grab a slice of the rapidly-growing market. According to Ali Research Center, online transactions in China are expected to reach $540 billion, or 10 percent of total retail transactions in the country.
Wanda E-commerce hopes to differentiate from Alibaba and other rivals like JD.com by focusing on an online-to-offline business model. Wanda claims that its various holdings give the “world’s largest offline consumer network,” with 1.5 million customers in 2014, a number that it expects to reach six billion by 2020. The company’s advantage is that it already has a significant number of brick-and-mortar retail businesses that it can leverage to gain customers and data for its online services.