Chinese conglomerate Tencent Holdings, which runs the WeChat platform, and JD.com have bought minority stakes in Chinese retail chain Better Life Commercial Chain Share, Reuters reports.
The Tencent subsidiary investing in Better Life will grab a 6% stake for $140 million, while JD will get a 5% stake for $117 million, according to the report. Hunan-based Better Life, or BuBuGao, operates more than 100 stores in China's Hunan and Jiangxi provinces and employs over 30,000 people, according to a customer profile from Manhattan Warehouse.
Better Life announced a strategic collaboration agreement with Tencent at the beginning of February. All three companies’ shareholders on Feb. 14 agreed to the transactions, according to a filing cited by Reuters.
China's major e-commerce players are moving assertively offline with experience- and technology-rich physical stores, not to mention key investments — a sign that rivalries are heating up.
JD is helped by its partnership with Walmart after buying the U.S. retail giant's Chinese e-commerce platform Yihaodian last year. The two have cinched their ties tighter since, with integrated loyalty programs, for example.
JD especially is presenting Alibaba with serious competition, including during Alibaba's own signature red-letter shopping event, Singles Day, which has delivered record-breaking sales each year. JD.com brought in a whopping $19 billion in sales during last year's event in November.
"JD.com's performance will be a cause for concern for Alibaba," Maggie Gilliam, director of executive education at global intelligence and advisory firm PlanetRetail RNG, told Retail Dive in an email. "JD is rightly making much of its [approximately] 50% sales growth, and it needs to be noted that its biggest-selling brands were all tech/mobile telecoms brands."
The companies are battling it out in grocery in particular, and are building up not just operations but also their tech prowess. JD last month announced a new, tech-enabled physical store chain under its JD Fresh grocery banner, equipped with smart carts that give information as customers pick up goods, according to a company blog post. JD plans some 1,000 locations in the next three to five year. Meanwhile, on the same day, Alibaba's Hema supermarket said it would add 30 locations in Beijing by the end of this year, expanding to 35 stores, according to a company blog post.
JD.com has also teamed up with Fung Retailing, an operator of about 3,000 stores globally, to build a research and development center dedicated to developing artificial intelligence projects and the sharing of AI information and expertise, while Alibaba debuted a new touchscreen FashionAI system for personal apparel recommendations during Singles Day last year.