Tencent And JD.com invests $863M In Online Retailer Vipshop

Chinese social media giant Tencent and e-commerce platform JD.com on Monday said they will jointly invest $863 million in Chinese discount online retailer Vipshop Holdings.

Tencent will invest $604 million in exchange for a 7% stake in Vipshop, while JD.com will invest $259 million for 5.5%. The investment amounts represent a 55% premium over Vipshop's closing share price on Friday of $8.44.

Tencent President Martin Lau said “We look forward to providing Vipshop with our audiences, marketing solutions, and payment support to help the company provide branded apparel and other product categories to China's rising middle class. The strength of Vipshop's flash sale and apparel businesses, as well as its outstanding management team, create clear and strong synergies with us.

The deal represents a major alliance in China's e-commerce market, where competition for retail brands between JD.com and Alibaba Group has grown increasingly fierce.

Tencent, Asia's most valuable company with a market capitalisation of $473 billion, is a major stakeholder in JD.com, and the two have recently upped cooperation on data and payments to better compete with Alibaba.

JD.com Chief Executive Richard Liu recently said roughly 100 Chinese apparel merchants had left the firm's platform in the last quarter due to what he called "coercive" tactics by competing platforms.

After the Vipshop deal closes, Tencent will allow Vipshop to capture traffic from WeChat, and JD.com will integrate Vipshop features into its own app and assist the firm in reaching sales targets.