Tencent Purchases 15 Percent Stake in Jingdong for $215 Million

Tencent Holdings Ltd., the owner of popular messaging services WeChat and QQ, announced on March 9 that it had formed a strategic partnership with China’s second-largest e-commerce company. JD.com, Inc., also known as Jingdong or 360Buy, will gain two of Tencent’s e-commerce holdings, a minority stake in Tencent’s e-commerce marketplace, and the ability to promote its services on WeChat, which has more than 270 million monthly active users. In return, Tencent will get a 15 percent stake in Jingdong for $215 million.

News of the Tencent-Jingdong partnership comes as Jingdong is planning for a $2 billion initial public offering (IPO) in either Hong Kong or the United States. Tencent has agreed to purchase an additional 5 percent in Jingdong shares after that IPO, according to a company statement.

The strategic partnership will directly challenge Jingdong’s and Tencent’s rival Alibaba as the e-commerce company struggles to attract users to its social media and smart phone programs. Alibaba controls about half of China’s online retail market, while Jingdong controlled 18.3 percent of the market in third quarter of 2013. Speaking to Reuters, Bryan Wang of Forrester Research called Jingdong’s integration with WeChat a “game changer.”